• On March 17, 2022, S&P Global Ratings lowered its foreign and local currency sovereign credit ratings on Russia to 'CC/C' from 'CCC-/C'. We also revised downward our transfer and convertibility (T&C) assessment to 'CC'. The ratings on Russia remain on CreditWatch negative.
• To preserve remaining foreign currency buffers, Russia's authorities have--among other steps--introduced capital-control measures that we understand could constrain nonresident bondholders from receiving interest and principal payments on time.
• We consider the debt of Russian companies highly vulnerable to nonpayment, since Eurobonds they issued may face technical payment difficulties, due to international sanctions, and some nonresident holders of local currency debt may also be unable to receive certain debt-service payments in full and on time.
• We are downgrading 42 Russia-incorporated corporate entities to 'CC', the same level as the foreign currency sovereign rating and T&C assessment, given the numerous currency restrictions imposed by the Central Bank of Russia; all issue and issuer credit ratings remained on CreditWatch negative.
• We are subsequently withdrawing our ratings following the decision of the European Union (EU) to ban the provision of credit ratings to legal persons, entities, and bodies established in Russia.

NEW YORK (S&P Global Ratings) April 1, 2022--S&P Global Ratings said today that it has lowered its foreign and local currency long-term issuer credit ratings on 42 corporate entities incorporated in Russia to 'CC' from 'CCC-'. We affirmed our 'C' short-term issuer credit ratings on the companies, where applicable. All ratings remained on CreditWatch with negative implications. We subsequently withdrew all our ratings on the entities and their debt issues (see the ratings list below).

The downgrades follow the lowering of our ratings on Russia to 'CC/C' from 'CCC-/C' and downward revision of our transfer and convertibility (T&C) assessment on Russia to 'CC' from 'CCC-' (see "Russia Foreign And Local Currency Ratings Lowered To 'CC' On High Vulnerability To Debt Nonpayment, Still On Watch Neg," published March 17, 2022, on RatingsDirect). A country T&C assessment reflects S&P Global Ratings' view of the likelihood of a sovereign restricting nonsovereign access to foreign exchange needed to satisfy the nonsovereign's debt service obligations (see "Methodology: Criteria For Determining Transfer And Convertibility Assessments," published May 18, 2009).

We lowered our foreign currency ratings on various Russian corporates in line with our T&C assessment, given the numerous currency restrictions that were imposed by the Central Bank of Russia. This reflects the increasing reported difficulties of companies meeting debt-service payments to their bondholders in foreign currency. The payment difficulties stem from international sanctions that reduce Russia's available foreign exchange reserves and restrict its access to the global financial system, markets, and infrastructure. They also follow the series of measures rolled out by the Russian authorities aimed at shielding the ruble while preserving remaining usable reserve buffers. All these measures have restricted the ability of nonresident domestic and foreign currency bondholders to receive interest, principal payments, or both, on time and in full.

We also lowered our local currency issuer credit ratings on the companies because we believe that their capacity to service obligations in rubles may also be significantly disrupted in case of a default on foreign currency obligations. We note as well that ratings on domestic banks were 'CC', and on CreditWatch negative, before their withdrawal on March 31, 2022. This indicates high vulnerability to nonpayment from the local banking sector, on which domestic corporates--even those with no market debt or foreign currency liabilities outstanding--rely for day-to-day business activities.

Our 'CC/C' ratings reflect our expectation that a default is a virtual certainty, regardless of the time to default. The CreditWatch negative status on the long- and short-term ratings indicates that we could lower the foreign currency issuer credit ratings to 'SD' (selective default) if a company fails to make a debt-service payment in accordance with the terms of an obligation, and if we do not expect such payment to be made within an applicable grace period. In addition, we would lower the local currency ratings to 'SD' if we were to assess that some nonresident bondholders are unable to access debt-service payments on local bond/bank debts within an applicable grace period.

The withdrawal of the ratings follows the EU's decision on March 15, 2022, to ban the provision of credit ratings to legal persons, entities, or bodies established in Russia and our ensuing announcement that we will withdraw all our outstanding ratings on relevant issuers before April 15, 2022, the deadline imposed by the EU (see "S&P Global Ratings To Withdraw Ratings On Russian Entities," published March 21, 2022).

Related Criteria

• General Criteria: Hybrid Capital: Methodology And Assumptions, March 2, 2022
• General Criteria: Environmental, Social, And Governance Principles In Credit Ratings, Oct. 10, 2021
• General Criteria: Group Rating Methodology, July 1, 2019
• Criteria | Corporates | General: Corporate Methodology: Ratios And Adjustments, April 1, 2019
• Criteria | Corporates | General: Reflecting Subordination Risk In Corporate Issue Ratings, March 28, 2018
• General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017
• Criteria | Corporates | Industrials: Methodology: Investment Holding Companies, Dec. 1, 2015
• General Criteria: Rating Government-Related Entities: Methodology And Assumptions, March 25, 2015
• Criteria | Corporates | General: Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Dec. 16, 2014
• Criteria | Corporates | Industrials: Key Credit Factors For The Telecommunications And Cable Industry, June 22, 2014
• Criteria | Corporates | Industrials: Key Credit Factors For The Unregulated Power And Gas Industry, March 28, 2014
• Criteria | Corporates | General: Corporate Methodology, Nov. 19, 2013
• General Criteria: Ratings Above The Sovereign--Corporate And Government Ratings: Methodology And Assumptions, Nov. 19, 2013
• General Criteria: Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013
• Criteria | Corporates | Utilities: Key Credit Factors For The Regulated Utilities Industry, Nov. 19, 2013
• General Criteria: Methodology: Industry Risk, Nov. 19, 2013
• General Criteria: Methodology: Management And Governance Credit Factors For Corporate Entities, Nov. 13, 2012
• General Criteria: Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings, Oct. 1, 2012
• General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
• General Criteria: Stand-Alone Credit Profiles: One Component Of A Rating, Oct. 1, 2010

Related Research

• S&P Global Ratings To Withdraw Ratings On Russian Entities, March 21, 2022
• Russia Foreign And Local Currency Ratings Lowered To 'CC' On High Vulnerability To Debt Nonpayment, Still On Watch Neg, March 17, 2022

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