S&P Global Ratings downgraded Russia's credit rating further into “junk” territory due to the country's debt being “highly vulnerable to non-payment”, the agency said.
S&P lowered its foreign and local currency sovereign credit ratings on Russia to “CC”, from “CCC-", two notches above default. It also revised downwards its transfer and convertibility assessment to “CC”, from “CCC-". The country's ratings remain on a negative credit watch.
Earlier this month, Fitch Ratings and Moody's Investors Service downgraded Russia's sovereign credit rating to non-investment grade junk status due to the wave of US and EU sanctions.
“Our ratings focus on an issuer's ability and willingness to meet its financial obligations in full and on time, as well as in accordance with the terms of the obligation, including in the agreed currencies,” S&P said in a statement late Thursday.
The rating agency said its action was prompted by its understanding that investors did not receive a coupon payment on the Russian government's US dollar-denominated 2023 and 2043 eurobonds, when payment was due on March 16, 2022, owing to technical difficulties related to international sanctions.
“Although public statements by the Russian Ministry of Finance suggest to us that the government currently still attempts to transfer the payment to the bondholders, we think that debt service payments on Russia's eurobonds due in the next few weeks may face similar technical difficulties,” S&P said.
The rating agency also cited an exemption currently granted under the US sanctions that expires on May 25, which it said could further complicate Russia's ability to make its debt service payments after that date.
US Treasury’s restrictions on dealings with Russia’s central bank and other Russian institutions do not prevent the country from making payments on its dollar debt, at least until late May, Bloomberg reported, citing a Treasury representative.
Russia's payment difficulties are a result of a series of punitive measures imposed by western countries to incapacitate Moscow economically in response for its military offensive in Ukraine.
After plummeting as much as 100 per cent to the US dollar, Russia's rouble recovered some lost ground. As of Friday, it was down 38 per cent against the greenback since the start of the year.
The country's biggest banks have been disconnected from the global financial system, markets and infrastructure and its ability to conduct cross country payments has also been impeded by sanctions.
Russia has a 30-day grace period to meet its payment obligations on the bonds. In 1998, the Russian government and the country's central bank devalued the rouble and defaulted on debt.
“If funds are not accessible for investors or if a payment is made in a currency not stipulated in the terms of the obligation and we believe that the investor does not agree to the alternative payment, we could deem this a default,” S&P said.
JP Morgan processed $117 million interest payments from Russia for two of the country’s bonds and passed them on to Citigroup, the payment agent responsible for distributing the money to investors, the Financial Times and Bloomberg reported.
S&P said it is keeping Russia's ratings on negative watch to indicate that it could lower the foreign currency issuer credit ratings to selective default “if the Russian government fails to make a debt service payment in accordance with the terms of the obligation, and if we do not expect such payment to be made within an applicable grace period".
It also said it would lower the local currency rating to selective default if it assesses that some non-resident bondholders are unable to have access to debt service payments on local Russian OFZ bonds within an applicable grace period.
Rating downgrades signal a country is undergoing financial instability or may not have adequate cash reserves relative to its needs and financial obligations, which makes it speculative and considered a high credit risk. That will make it difficult for Russia and Russian companies to raise funding globally.
The amount Russia owes to bondholders is about 18 per cent of the country's gross domestic product.
Russia, which has about $60 billion in external debt and hundreds of billions of dollars worth of gold and foreign currency reserves, has said it could pay its debt in roubles because of the complications it faces as a result of sanctions. However, that would be considered a default by rating agencies.
On Thursday, the heads of international financial institutions said the Ukraine-Russia crisis will dent global economic growth, increase inflation and disrupt supply chains.
Russia's economy is expected to shrink 7 per cent this year, according to Moody's, while the Institute of International Finance forecasts a much deeper contraction at 15 per cent.
“The entire global economy will feel the effects of the crisis through slower growth, trade disruptions and steeper inflation, harming especially the poorest and most vulnerable,” said the heads of the European Bank for Reconstruction and Development, the European Investment Bank, the Council of Europe Development Bank, the International Monetary Fund and the World Bank.
“Higher prices for commodities like food and energy will push inflation up further. Countries, particularly those neighbouring Ukraine will suffer disruptions in trade, supply chains and remittances, as well as surges in refugee flows.
“Reduced confidence and higher investor uncertainty will impact asset prices, tighten financial conditions and could even generate capital outflows from emerging markets.”
Oil prices hit a 14-year high last week, rallying to about $140 a barrel. Both key benchmarks, Brent and West Texas Intermediate, were well above $100 a barrel on Friday.
The conflict has affected a major breadbasket of the world as both Russia and Ukraine account for about 29 per cent of global wheat supplies. It has also led to soaring commodity prices globally.
“Surging prices for oil, natural gas, grains, fertilisers and industrial metals will feed through into higher producer and consumer price inflation worldwide — in advanced, emerging and lesser-developed countries,” said Stephen Dover, chief market strategist and head of the Franklin Templeton Investment Institute.
“Even in countries with large domestic supplies of energy and food resources, such as China [coal, grains] or the US [crude oil, natural gas, various agricultural products], prices are set in world markets, meaning that increases are felt universally.”
UAE currency: the story behind the money in your pockets
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Killing of Qassem Suleimani
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
More from Rashmee Roshan Lall
UAE currency: the story behind the money in your pockets
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
WIDE%20VIEW
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KILLING OF QASSEM SULEIMANI
The Pope's itinerary
Sunday, February 3, 2019 - Rome to Abu Dhabi
1pm: departure by plane from Rome / Fiumicino to Abu Dhabi
10pm: arrival at Abu Dhabi Presidential Airport
Monday, February 4
12pm: welcome ceremony at the main entrance of the Presidential Palace
12.20pm: visit Abu Dhabi Crown Prince at Presidential Palace
5pm: private meeting with Muslim Council of Elders at Sheikh Zayed Grand Mosque
6.10pm: Inter-religious in the Founder's Memorial
Tuesday, February 5 - Abu Dhabi to Rome
9.15am: private visit to undisclosed cathedral
10.30am: public mass at Zayed Sports City – with a homily by Pope Francis
12.40pm: farewell at Abu Dhabi Presidential Airport
1pm: departure by plane to Rome
5pm: arrival at the Rome / Ciampino International Airport
Abramovich London
A Kensington Palace Gardens house with 15 bedrooms is valued at more than £150 million.
A three-storey penthouse at Chelsea Waterfront bought for £22 million.
Steel company Evraz drops more than 10 per cent in trading after UK officials said it was potentially supplying the Russian military.
Sale of Chelsea Football Club is now impossible.
Killing of Qassem Suleimani
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Revibe%20%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Hamza%20Iraqui%20and%20Abdessamad%20Ben%20Zakour%20%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Refurbished%20electronics%20%0D%3Cbr%3E%3Cstrong%3EFunds%20raised%20so%20far%3A%3C%2Fstrong%3E%20%2410m%20%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFlat6Labs%2C%20Resonance%20and%20various%20others%0D%3C%2Fp%3E%0A
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Indika
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TEAMS
EUROPE:
Justin Rose, Francesco Molinari, Tyrrell Hatton, Tommy Fleetwood, Jon Rahm, Rory McIlroy, Alex Noren, Thorbjorn Olesen, Paul Casey, Sergio Garcia, Ian Poulter, Henrik Stenson
USA:
Brooks Koepka, Justin Thomas, Dustin Johnson, Patrick Reed, Bubba Watson, Jordan Spieth, Rickie Fowler, Webb Simpson, Tiger Woods, Phil Mickelson, Bryson DeChambeau ( 1 TBC)
Kamindu Mendis bio
Full name: Pasqual Handi Kamindu Dilanka Mendis
Born: September 30, 1998
Age: 20 years and 26 days
Nationality: Sri Lankan
Major teams Sri Lanka's Under 19 team
Batting style: Left-hander
Bowling style: Right-arm off-spin and slow left-arm orthodox (that's right!)
Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
The five pillars of Islam
Retail gloom
Online grocer Ocado revealed retail sales fell 5.7 per cen in its first quarter as customers switched back to pre-pandemic shopping patterns.
It was a tough comparison from a year earlier, when the UK was in lockdown, but on a two-year basis its retail division, a joint venture with Marks&Spencer, rose 31.7 per cent over the quarter.
The group added that a 15 per cent drop in customer basket size offset an 11.6. per cent rise in the number of customer transactions.
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Engine: 5.6-litre V8
Transmission: seven-speed automatic
Power: 400hp
Torque: 560Nm
Price: Dh234,000 - Dh329,000
On sale: now
Springtime in a Broken Mirror,
Mario Benedetti, Penguin Modern Classics
Venue: Sharjah Cricket Stadium
Date: Sunday, November 25
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Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
World ranking (at month’s end)
Jan - 257
Feb - 198
Mar - 159
Apr - 161
May - 159
Jun – 162
Currently: 88
Year-end rank since turning pro
2016 - 279
2015 - 185
2014 - 143
2013 - 63
2012 - 384
2011 - 883
