Moody’s Downgrades Russia’s Sovereign Rating To Ba1 From Baa3; Outlook Negative

Moody’s Investors Service has today downgraded the government of Russia’s sovereign debt rating to Ba1/Not Prime (NP) from Baa3/Prime-3 (P-3). The rating outlook is negative. This rating action concludes the review for downgrade that commenced on January 16, 2015.

Moody’s downgrade of Russia’s government bond rating to Ba1 is driven by the following factors:

• The continuing crisis in Ukraine and the recent oil price and exchange rate shocks will further undermine Russia’s economic strength and medium-term growth prospects, despite the fiscal and monetary policy responses;
• The government’s financial strength will diminish materially as a result of fiscal pressures and the continued erosion of Russia’s foreign exchange (FX) reserves in light of ongoing capital outflows and restricted access to international capital markets;
• The risk is rising, although still very low, that the international response to the military conflict in Ukraine triggers a decision by the Russian authorities that directly or indirectly undermines timely payments on external debt service.

S&P: Greece Long-Term Rating Lowered One Notch To ‘B-‘ And Kept On CreditWatch Negative

OVERVIEW

• Liquidity constraints have narrowed the timeframe during which Greece’s new government can reach an agreement with its official creditors on a financing programme, in our view.
• We believe the potential uncertainties surrounding the timing and success of such an agreement risk exacerbating deposit outflows, depressing investment, and weakening tax compliance.
• As a result, we have lowered our long-term rating on Greece to ‘B–’ from ‘B’.
• The long- and short-term ratings remain on CreditWatch negative.

S&P: Russia Foreign Currency Ratings Lowered To ‘BB+/B’; Outlook Negative

OVERVIEW

• In our view, the Russian Federation’s monetary policy flexibility has weakened, as have its economic growth prospects.
• We are therefore lowering our foreign currency sovereign credit ratings on Russia to ‘BB+/B’ from ‘BBB-/A-3’ and our local currency sovereign credit ratings to ‘BBB-/A-3’ from ‘BBB/A-2’.
• At the same time, we removed these ratings from CreditWatch, where they were placed with negative implications on Dec. 23, 2014.
• The outlook is negative, reflecting our view that Russia’s monetary policy flexibility could diminish further. We could lower the ratings if external and fiscal buffers deteriorate over the next 12 months faster than we currently expect.

S&P: Russian Federation Ratings Placed On CreditWatch Negative On Review Of Monetary Flexibility And Weakening Economy

OVERVIEW

We are reviewing our assessment of Russia’s monetary flexibility and the impact of the weakening economy on its financial system. As a result, we are placing our long-term sovereign credit ratings on Russia on CreditWatch with negative implications. We expect to resolve the CreditWatch upon the conclusion of our review, which we expect by mid-January.

France Outlook Revised To Negative By S&P; ‘AA/A-1+’ Ratings Affirmed

OVERVIEW

• In our view, the French government’s budgetary position is deteriorating in light of France’s constrained nominal and real economic growth prospects.
• We believe that, due to policy implementation risk related to the budgetary consolidation and structural reforms, a recovery of the French economy could prove elusive and that France’s public finances might deteriorate beyond 2014, although this is not our base-case scenario.
• As a result, we are revising our outlook on France to negative from stable and affirming our ‘AA/A-1+’ long- and short-term sovereign credit ratings.
• The ratings on France remain supported by our view of the French economy’s high income per capita and productivity, its diversification, and its stable financial sector.