Paris, Mar 12, 2022 (AFP) – Ratings agency Fitch downgraded the debt ratings of 28 Russian commodity companies on Saturday, saying a “default” seemed likely.

Fitch downgraded from B to “mostly CC” ratings of major gas group Gazprom, oil company Lukoil, mining companies Rusal, Polyus, Evraz and 23 other companies working with raw materials. This means that it is “likely” that these companies will not be able to meet their financial commitments.

For rating agencies, the authorization granted by the Russian government to pay debts in rubles arising in countries on the “hostile” list could jeopardize the ability of these companies to pay their creditors on time.

This list includes all countries of the European Union, Australia, United Kingdom, Canada, Monaco, South Korea, United States of America, Switzerland and Japan.

The move is part of a package of actions by the Kremlin and Russia’s central bank to try to cushion the fall of the national currency, which has lost half its value due to sanctions by Western powers against Russia following the invasion of Ukraine.

Fitch believes that “continued tightening of sanctions, including restrictions on trade and energy imports, increases the likelihood of a political response from Russia and weakens its economy, creating a (hostile) operating environment for businesses.”

Britain on Tuesday announced an embargo on Russian oil, as did the United States on oil and gas.

Moody’s, another rating agency, also downgraded Gazprom and Lukoil this week to levels that imply a very high risk of default.

In early March, the three major rating agencies placed Russia in the category of those unable to repay its long-term debt, due to accumulated sanctions against it.

Later, Fitch further lowered this note, suggesting that Russia faces an “imminent default” on its debt.

The lower the performance score, the less trust the lender has in the country, so the possibility of borrowing at a reasonable rate of interest is very complex.

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GAZPROM

RUSAL UNITED COMPANY

LOUKOIL

EVRAZ PLC

MOODY’S CORP.