Ratings agency Fitch warned Tuesday that a Russian default on its national debts is “imminent,” while downgrading the country’s healthy-investment rating to a dismal “C.”
The international agency cited a recent decree by Russian President Vladimir Putin allowing certain foreign debts to be paid off in the plummeting ruble, which is currently worth less than eight-tenths of an American cent.
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“More generally, the further ratcheting up of sanctions, and proposals that could limit trade in energy, increase the probability of a policy response by Russia that includes at least selective non-payment of its sovereign debt obligations,” the agency said amid Russia’s ongoing war against Ukraine, which as brought severe global economic sanctions against it.
Putin’s decree allows public and private entities in Russia to pay back debt in rubles if the debt is owed to a creditor from “countries that engage in hostile activities,” Bloomberg reported. That list includes Japan, the US, and European Union member states.
The Russian government has $117 million in bond debts due March 16, and analysts fear a payment in rubles could trigger a credit default swap.
An additional $65 million is due the next week.