• We lowered our unsolicited foreign currency sovereign rating on Russia to 'SD/SD' from 'CC/C' and withdrew all ratings on April 8, 2022, after the downgrade to 'CC/C' from 'CCC-/C' on March 17, 2022; the local currency ratings were on CreditWatch negative and the transfer and convertibility (T&C) assessment at 'CC' before the withdrawal.
• 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.
• Consequently, we are lowering our ratings on five companies incorporated outside Russia, but with significant exposure to that country, to 'CC', in line with the T&C assessment, and keeping them on CreditWatch with negative implications.
• We are subsequently withdrawing our ratings on those companies 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 13, 2022--S&P Global Ratings said today that it has lowered its long-term issuer credit ratings on the following five corporate entities, to 'CC' from 'CCC-' (see ratings list):

• Borets International Ltd.
• Eurasia Drilling Company Ltd.
• Evraz PLC.
• X5 Retail Group N.V.
• Yandex N.V.

All ratings remained on CreditWatch with negative implications and were subsequently withdrawn.

The downgrades of the five entities incorporated outside Russia follow recent actions on Russia. First, we lowered on March 17, 2022, our ratings on the sovereign to 'CC/C' from 'CCC-/C' and revised downward our T&C to 'CC' from 'CCC-' (see "Russia Foreign And Local Currency Ratings Lowered To 'CC' On High Vulnerability To Debt Nonpayment, Still On Watch Neg," on RatingsDirect). Second, we lowered on April 8, 2022, our foreign currency ratings on Russia to 'SD/SD' (selective default) from 'CC/C', with the local currency ratings remaining on CreditWatch with negative implications and the T&C assessment at 'CC' (see "Russia Foreign Currency Ratings Cut To 'SD', Local Currency Ratings Kept At 'CC'; All Ratings Subsequently Withdrawn").

We used the same analytical approach for the five corporates as that for other companies incorporated in Russia (see "Various Russian Corporate Entities Downgraded To 'CC' After Sovereign Rating Action; Ratings Withdrawn On EU Ban," published April 1, 2022). 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 the five companies 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. Although the five companies are incorporated outside Russia, they may in our view face the same payment difficulties as peers incorporated in Russia, since most of their operations are in that country.

We also lowered our local currency issuer credit ratings on the five 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. In addition, our ratings on Russia-based 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.

Following the EU's decision on March 15, 2022, to ban the provision of credit ratings to legal persons, entities, or bodies established in Russia, we withdrew our outstanding ratings on corporate entities incorporated in Russia (see "S&P Global Ratings To Withdraw Ratings On Russian Entities," published March 21, 2022, and "Various Russian Corporate Entities Downgraded To 'CC' After Sovereign Rating Action; Ratings Withdrawn On EU Ban," published April 1, 2022).

We have now also withdrawn our ratings on five corporate entities with large exposure to Russia. Despite being incorporated outside Russia, these companies operate predominantly in Russia, where most of their manufacturing/production facilities, employees, and/or clients are located. We are also withdrawing our ratings on these companies' Russian subsidiaries or financing vehicles, where relevant.

Related Criteria

• 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 | General: Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Dec. 16, 2014
• General Criteria: Methodology: Industry Risk, Nov. 19, 2013
• Criteria | Corporates | General: Corporate Methodology, Nov. 19, 2013
• General Criteria: Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013
• General Criteria: Ratings Above The Sovereign--Corporate And Government Ratings: Methodology And Assumptions, 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

• Russia Foreign Currency Ratings Cut To 'SD', Local Currency Ratings Kept At 'CC'; All Ratings Subsequently Withdrawn, April 8, 2022
• Various Russian Corporate Entities Downgraded To 'CC' After Sovereign Rating Action; Ratings Withdrawn On EU Ban, April 1, 2022
• 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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