What happens when a nation in retaliation refuses to recognize a universally accepted standard ratings agency? Stay tuned. Pandora’s box has been opened on yet another front. Full-blown economic warfare is in full motion.
The Central Bank of Russia will no longer use credit ratings from Standard & Poor’s, Fitch, or Moody’s that were assigned after March 1, 2014.
All credit ratings given to Russian companies and banks will now be at the discretion of the Board of Directors of the Bank, according to a press statement Monday. The regulator will assess whether or not the ratings made after March are accurate.
“According to the Bank of Russia Board of Directors’ decision, the rating date for credit institutions and their issued financial instruments, including securities, to implement Bank of Russia regulations, shall be 1 March 2014; as for other entities, listed in the ordinance, and their issued securities, this rating date shall be 1 December 2014,” the press release said.
The decision comes after Fitch and Moody’s downgraded Russian sovereign debt to just above junk status. Standard & Poor’s will decide whether it cuts Russian debt to junk level by the end of January.
Ratings cuts by the international agencies have increased since Crimea rejoined Russia in mid-March; at the same time the West began to levy sanctions against Moscow.
On Friday, Moody’s cut Russia’s government bond rating to Baa3 from Baa2, just one level above junk. The agency also forecast the economy will contract 5.5 percent in 2015, and an additional 3.0 percent in 2016.
The week before, Fitch ratings agency knocked Russia’s investment rating down to BBB-, warning that the country won’t see growth until 2017.
Full article: Russian Central Bank voids Standard & Poor’s, Moody’s, Fitch ratings (Russia Today)