Russia’s Sovereign Bond Rating May Be Cut, Moody’s Says

Russia’s government bond rating was put on review for downgrade by Moody’s Investors Service, which cited a weakening economy amid the conflict with Ukraine.

The ratings company said if the review leads to a downgrade, the most likely outcome would be a one-level adjustment. Russia’s Baa1 rating is the third-lowest investment grade.

Russia’s worst standoff with the U.S. and its allies since the Cold War should further impair growth that was already forecast to be the slowest since 2009. Moody’s said the uncertainty triggered by the conflict with Ukraine will cause the economy to contract about 1 percent this year, compared with previous expectations of growth of about 2 percent.

“The current crisis could significantly dampen investor sentiment for several years to come by adding to existing deterrents to investment posed by Russia’s weak rule of law and high levels of corruption,” Moody’s said in a statement. “This could further damage the country’s economic outlook given its large investment needs.”

Both Fitch Ratings and Standard & Poor’s changed their outlooks on Russia to negative last week.

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