Moody's Cuts Russia's Ratings to Brink of Junk

        Moody's Investors Service on Friday cut its ratings on Russia to the brink of junk territory, and signaled possible further downgrade, citing the effect of plunging oil prices and the free-falling ruble.
        The downgrade brings Moody's ratings in line with those from Standard & Poor's Ratings Services and Fitch Ratings.
        Moody's, which lowered its ratings one notch to Baa 3, said it would be reviewing the country's balance sheet, particularly its foreign-currency-reserves cushion, given the risk of oil prices falling further at a time when Russian banks" access to international markets remains blocked by international sanctions. Still, Moody's noted, Russia's balance sheet "remains ostensibly very strong."
        Moody's lowered the government bond rating along with the country ceilings for foreign-currency debt one notch to Baa 3 and local-currency debt and deposits also one notch to Baa 2. It kept its country ceiling for foreign currency bank deposits at Ba1/Non Prime, below investment grade.
        The rating firm said it now expects Russia's real gross domestic product to grow around 5.5% in 2015 and 3% in 2016, bringing real growth over the 10-year period through 2018 to "virtually zero."
        Higher interest rates and rapidly rising inflation, Moody's warned, will further squeeze consumers" disposable incomes, while restricted access to international funding will continue to curtail banks" ability to provide credit.
        Due to the high level of uncertainty, consumers are likely to save, rather than spend, further hurting the country's economic recovery, Moody's said.
        Write to Maria Armental at maria.armental@wsj.com
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        (END) Dow Jones Newswires

        January 18, 2015 20:50 ET (01:50 GMT)

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