Moody's downgrades Russia rating to Ca on rise in default risk

Moody's cut Russia's credit rating to Ca -- the second-lowest in its ratings ladder, citing a rise in default risk.

Moody's cut Russia's credit rating to Ca on Sunday, the second-lowest rung of its ratings ladder, citing central bank capital controls that are likely to restrict payments on the country's foreign debt and lead to default.

Moody's said its decision to cut Russia's rating was "driven by severe concerns around Russia's willingness and ability to pay its debt obligations".

Russia's economy has been plunged into crisis as a result of harsh sanctions imposed by the West which include freezing assets of the central bank held overseas and severing several Russian banks from the SWIFT international payments systems.

The central bank last week put a temporary halt on payments and on Wednesday said it had barred coupon payments for foreign investors holding rouble-denominated sovereign debt, known as OFZs. It did not say how long the curbs would be in place. Read full story

On Sunday, the central bank said Russian creditors and those from countries that had not joined in with sanctioning the country would be paid in roubles at the exchange rate prevailing at the time of payment.

Creditors could also be paid in the currency in which the debt was issued if they obtained special permission, it said.

For creditors from other countries, payments would be deposited in roubles into a special account which would be governed by rules set by the central bank, it added.