S&P cuts Russian banks

S&P said it downgraded the ratings of Russian financial institutions after lowering Russia’s foreign- and local-currency ratings to CCC- from BB+ and CCC-, respectively. The agency also placed their ratings on CreditWatch with negative implications. Russia’s ratings are also on negative watch.

“The downgrade follows the imposition of measures that we believe will likely substantially increase the risk of financial institutions' default. To mitigate the resulting high exchange rate and financial market volatility, and to preserve remaining foreign currency buffers, Russia's authorities have–among other steps–introduced capital-control measures that we understand could constrain banks from honoring their obligations in full and on time. More severe G-7 government sanctions and other restrictions were imposed on Russia in response to its accelerated military actions in Ukraine,” S&P said in a press release.

S&P said it lowered ABH Financial Ltd.’s issuer rating to CCC- from BB-, JSC Alfa-Bank’s issuer rating to CCC- from BB+, ABH Financial Ltd.’s senior unsecured rating to CCC- from BB-, Alfa Holding Issuance plc’s senior unsecured rating to CCC- from BB-, CBOM Finance plc’s senior unsecured rating to CCC- from BB and Gazprombank’s issuer and senior unsecured ratings to CCC- from BB+.

The agency warned it could downgrade the ratings further over the next few weeks. “We expect to resolve the CreditWatch placement once we have more clarity on the technical ability and/or willingness of financial institutions to honor their obligations in full and on time.”

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