S&P downgrades Russia to BBB-

Harriet Green
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Standard and Poor’s has cut its credit rating for Russia to BBB- - the lowest investment grade.

The reason for the downgrade to a notch above "junk" is owing to large capital outflows from the country and worsening economic risks, the credit rating agency said, as the situation over Ukraine becomes more tense. It maintains a negative outlook.

The ongoing Ukraine-Russia crisis is likely to affect global markets today, as concerns that the situation could escalate grow. John Kerry, US secretary of state, has said Russia is guilty of “distraction, deception and destabilisation” in eastern Ukraine.

In a statement today, S&P said:

The tense geopolitical situation between Russia and Ukraine could see additional significant outflows of both foreign and domestic capital from the Russian economy and hence further undermine already weakening growth prospects.

The rouble weakened slightly on the news.