Standard & Poor’s slashes Russian sovereign debt rating

Russia’s sovereign debt rating was cut to the lowest investment grade at Standard & Poor’s, which said further downgrades are possible if economic growth deteriorates and the conflict in Ukraine sparks wider sanctions.

S&P cut Russia’s rating one step to BBB-, it said in a statement yesterday. The grade, on par with Brazil and Azerbaijan, has a negative outlook. S&P last downgraded Russia in December 2008. Russia’s currency and bonds fell.

“The tense geopolitical situation between Russia and Ukraine could see additional significant outflows of both foreign and domestic capital from the Russian economy and hence further undermine already weakening growth prospects,” S&P said in the statement.

The United States and its allies have a list of additional sanctions ready and will enact them if there is no progress de-escalating the crisis in Ukraine, where security forces are moving against pro-Russia separatists in the country’s east, U.S. President Barack Obama said in Tokyo Thursday.

Last month, Russia was placed on review for a downgrade by Moody’s Investors Service and Fitch Ratings cut its outlook to negative.

The downgrade was expected by investors and won’t significantly change their behavior, Russian Economy Minister Alexei Ulyukayev told reporters yesterday.

Bloomberg