Good morning and welcome to our ongoing coverage of the world economy, financial markets, the eurozone and business.
Russia is on the brink of defaulting on its debts, ratings agency Fitch has warned, as sanctions imposed since the Ukraine war hit its economy.
Fitch has downgraded Russia’s sovereign debt rating to its second-lowest level, six notches to C. That’s just one step above borrowers who have defaulted.
The agency warns:
The ‘C’ rating reflects Fitch’s view that a sovereign default is imminent.
AFP news agency
(@AFP)#TO UPDATE Ratings agency Fitch has again downgraded Russia’s sovereign debt rating to junk territory from “B” to “C”, saying the decision reflects the view that a default is “imminent”.
Junk status is the category of countries at risk of not being able to pay their debt pic.twitter.com/TNCfu3JFNb
Fitch said developments since it last downgraded Russia on March 2 had further undermined the country’s willingness to repay government debt.
He points to President Vladimir Putin’s decree last week that Russian creditors can use rubles to pay off some foreign-currency debts, and the country’s central bank’s restriction on some transfers of ruble-denominated debt coupons.
The intensification of sanctions could also lead Moscow to default on its obligations, says Fitch:
The further increase in sanctions and proposals that could limit energy trading increase the likelihood of a political response by Russia that includes at least selective default on its sovereign debt obligations.
The statement comes after the US and UK said they will ban Russian oil as the economic response to the Ukraine invasion continued to mount.
Russia is due to make its next debt payment on March 16, although it would have a 30-day grace period to meet coupon payments.
Western sanctions, including a ban on Russia’s central bank from accessing foreign exchange reserves, have prevented Putin from accessing much of the $630 billion war chest accumulated in foreign currency before the invasion.
Yesterday, a wave of major Western countries suspended business in Russia, with Starbucks, Coca-Cola, Pepsi and McDonald’s joining the post-war pullout from Ukraine.
Shell announced plans to withdraw from Russian oil and gas and Unilever has said it will stop importing and exporting its products with Russia:
European markets are set to open higher, with the FTSE 100 on track to jump more than 1% at the open.
jeremy naylor
(@JeremyNaylor_IG)#Wednesday mkts: #Europe expected but seems fragile. china below #HangSang new minimum of 5 and a half years. List of Co’s out of #Russia it grows #Petroleum while the US, UK, EU plans to ban Russian production. #Gold close to all-time highs. LME stops #Nickel trade – #China trader loses billions on short nickel. pic.twitter.com/HugYHdRw1S
The agenda
- 3:00 pm: Total US JOLT Job Openings for January
- 15:30 GMT: Weekly US Oil Inventory figures from the IEA
