US sanctions against specific Russian companies are negative, but not an immediate threat to bank and corporate ratings, says Fitch Ratings in a report analysing the impact of additional sanctions on banks, corporates and the sovereign.
"The additional sanctions are an indication of the willingness to tighten sanctions and may increase downside risk to growth. We lowered our growth forecast in June for Russia to 0.5% in 2014 and 1.5% in 2015, mainly due to the impact of US and EU sanctions and rouble depreciation. We also revised the Outlook on Russia's 'BBB' sovereign rating to Negative from Stable in March in anticipation of the impact of the sanctions announced that month," the statement emphasizes.
In Fitch's view, the new sanctions could cause a fresh spike in investor risk aversion, which may limit many companies' access to global bond markets. While Russian banks have the firepower to refinance part of corporates' foreign debt repayments, this may place banks' already constrained capital under pressure. Nevertheless, the Russian government has substantial flexibility to support both banks and corporates with its formidable balance sheet.
The report also details why US economic sanctions targeted against specific Russian banks and companies announced yesterday will not have an immediate effect on the ratings of Vnesheconombank, (BBB/Negative), Gazprombank (BBB-/Negative), OAO Novatek (BBB-/Stable) or their subsidiaries. It goes on to evaluate the long-term impact of sanctions