Russian Debt Moves Toward “Junk” Rating

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By Douglas A. McIntyre Updated Published

RussiaFitch has downgraded Russia’s sovereign debt and says it may have to do so again.

The new rating is only two levels above "junk". With income from crude dropping sharply, the Russian economy is probably already in a deep recession.

According to Reuters, "Fitch Ratings on Wednesday downgraded Russia’s sovereign rating to ‘BBB’ and said further cuts were possible due to low commodity prices, high capital outflows, melting reserves and corporate debt problems."

Who holds Russia’s debt instruments? That is a good question. It is unlikely that Russia would go into default, but if oil drops below $30 and stays there for several quarters, the possibility starts to become an issue.

Maybe Russia’s largest creditors are large international banks. That will give them something new to write-off.

Douglas A. McIntyre

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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