Standard and Poor's Downgrades Russia's Credit Rating

Standard and Poor's Downgrades Russia's Credit Rating

by Chriss W. Street 25 Apr 2014

http://cdn.breitbart.com/Big-Peace/2014/04/25/S-P-Downgrades-Russia-to-Near-Junk-Rating

Standard & Poor’s downgraded Russia’s credit rating to BBB-, just one notch above junk, and warned that the nation faced a further downgrade in the event of tighter financial sanctions by members of the North Atlantic Treaty Organization (NATO). To prevent a big drop in the exchange rate of their ruble currency, Russia’s central bank increased its benchmark interest rate to 7.5% in an effort to trim inflation.

The Central Bank of Russia raised the rate it loans to the nation’s bank by .5% following the S&P downgrade. The last time the country’s monetary authorities raised rates was in March--to 7% from 5.5%--at the start of the Ukraine crisis.

Investors concerned about the Ukrainian crisis and sanctions pulled $64 billion out of Russia in the first three months of 2014, according to S&P. Russia’s finance ministry acknowledged this week that the economy could fall into a recession in the second quarter.

The Russian Central Bank’s website cites Chair Elvira Nabiullina saying that "the adopted decision on the key rate would ensure a decline in inflation to no more than 6.0% by the end of 2014 and help to maintain the appropriate balance of inflation risks and the risks of further economic slowdown.”

The downgrade and interest rate rise came as Ukraine’s military crackdown on pro-Russian rebels in eastern Ukraine extended into a second day and concerns mounted internationally over the possibility of an invasion by the 40,000 Russian troops massed on Ukraine’s eastern border.

The Central Bank issued a downbeat assessment of the country’s economic prospects, noting that “the uncertainty of the foreign policy situation” was having a “negative impact” on output and investment.

Inflation is a top concern for policymakers as Russians suffered during previous episodes of currency devaluation and price increases in 1997-98 and 2008-09. The ruble has devalued by 9% so far this year, and core inflation is running 1% above the nation’s stated target objective of 5%.

On April 24th, U.S. Secretary of State John Kerry complained that Russia’s activities in eastern Ukraine were a “gross intimidation” to actively subvert the democratic process in its neighbor. “Russia is trying to achieve through the barrel of the gun and through the force of the mob what could not be achieved in any other way,” he said. While stopping short of announcing new sanctions, Secretary Kerry said the world was ready to act if Moscow did not take steps to de-escalate a crisis that Russia was itself stoking by ordering large-scale military exercises on the border of Ukraine earlier in the day.

From Tokyo Thursday, President Barack Obama accused Russia of failing to abide by the Geneva agreement, and he warned that new sanctions were already “teed up.”

The war of words between Moscow and Kiev intensified as Russian President Vladimir Putin warned Ukraine there would be “consequences” for using its army “against its own people.” Oleksandr Turchynov, Ukraine’s acting president, accused Russia of “coordinating and supporting terrorist killers.”

Russia

Thomas R. Pickering was a U.S. ambassador for Russia, a trustee at the Carnegie Corporation of New York, a distinguished fellow at the Brookings Institution (think tank).

Note: Pedro Aspe was a trustee at the Carnegie Corporation of New York, and a director at McGraw Hill Financial Inc.

Kurt L. Schmoke is a trustee at the Carnegie Corporation of New York, and a director at McGraw Hill Financial Inc.

Standard & Poor's is a subsidiary of McGraw Hill Financial Inc.

Edward B. Rust Jr. is a director at McGraw Hill Financial Inc., and a trustee at the Committee for Economic Development.

Richard H. Davis is a trustee at the Committee for Economic Development, and a managing director at Davis Manafort.

Viktor F. Yanukovich is a Davis Manafort client, and was the president of the Ukraine.

John J. DeGioia is a trustee at the Carnegie Corporation of New York, and a trustee at the Committee for Economic Development.

Foundation to Promote Open Society was a funder for the Committee for Economic Development, and the Brookings Institution (think tank).

George Soros was the chairman for the Foundation to Promote Open Society, and a board member of the International Crisis Group.

Igor S. Ivanov was a board member of the International Crisis Group, and a minister of foreign affairs for Russia.

Yegor Gaidar was a board member of the International Crisis Group, and a prime minister for Russia.

Carnegie Corporation of New York was a funder for the Brookings Institution (think tank).

Carlos Pascual was the VP for the Brookings Institution (think tank), and a U.S. ambassador for the Ukraine.

Steven Pifer was a senior fellow at the Brookings Institution (think tank), and a U.S. ambassador for the Ukraine.

Ivo H. Daalder was a senior fellow at the Brookings Institution (think tank), and a U.S. permanent representative for NATO.

John R. Allen is a fellow at the Brookings Institution (think tank), and was the supreme allied commander Europe nominee for NATO.

Lois Dickson Fitt was a guest scholar at the Brookings Institution (think tank), a director at McGraw Hill Financial Inc., and Susan E. Rice’s mother.

Standard & Poor's is a subsidiary of McGraw Hill Financial Inc.

Susan E. Rice was a senior fellow at the Brookings Institution (think tank), is Lois Dickson Fitt’s daughter, and the White House national security adviser for the Barack Obama administration.

Cameron F. Kerry is a fellow at the Brookings Institution (think tank), and John F. Kerry’s brother.

Teresa Heinz Kerry is an honorary trustee at the Brookings Institution (think tank), married to John F. Kerry, and was married to H. John Heinz III.

John F. Kerry is Cameron F. Kerry’s brother, married to Teresa Heinz Kerry, and the secretary at the U.S. Department of State for the Barack Obama administration.

H. John Heinz III was married to Teresa Heinz Kerry, and the heir to the H.J. Heinz Co.

D. Edward I. Smyth was the SVP for the H.J. Heinz Co., and is the EVP for the McGraw Hill Financial Inc.

Standard & Poor's is a subsidiary of McGraw Hill Financial Inc.