S&P Cuts Russia’s Credit Rating to Junk

Russia’s credit rating has been cut to junk – or below investment grade – by US ratings agency Standard and Poor’s for the first time in a decade.

S&P gave Russia a rating of BB+, which puts it at the same level as Indonesia and Bulgaria.

This makes it harder for Russia to borrow money from investors.

“Russia’s monetary-policy flexibility has become more limited and its economic growth prospects have weakened,” S&P said in a statement.

“We… see a heightened risk that external and fiscal buffers will deteriorate due to rising external pressures and increased government support to the economy,” it added.

Russia’s economy has been in free fall since the middle of last year, when plummeting oil prices cut the income for its oil industry and the unrest in Ukraine led to international sanctions.

Oil prices have plunged over 50% since the middle of last year, to $45 a barrel, which has been particularly difficult for Russia, which expected prices to stay near $100 per barrel in 2015.

Russia’s economy is expected to contract by 4% to 5% this year.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza