News // Russia
S&P Downgraded Russia for the First Time since 1998
09 December 2008 , 07:01696
Standard & Poor's said it was keeping a negative outlook on Russia's new BBB foreign currency rating and BBB+ long-term ruble rating.
"The negative outlook reflects the likelihood of a [further] downgrade if the banking crisis and external pressures continue to impair the government's balance sheet and its still substantial arsenal of liquid assets amid a weakening of underlying economic fundamentals," it said in a statement.
A Finance Ministry official said the downgrade would limit borrowing opportunities for domestic debt issued next year but should not hurt bond prices for now.
Russia, which has not recently needed to use bonds to raise cash, stopped issues this year because of a lack of demand.
The ratings decision "is linked to the fall in the oil price and the likely appearance of current account and trade deficits next year. The weakening of the ruble and the situation with the exchange rate could have also played a part," said Yaroslav Lissovolik, chief strategist at Deutsche Bank.
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