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S&P slashed Russia’s debt to junk and says there are already 30 corporate ‘fallen angels’ as a result of the war.

Rogue Valley

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3.20.22
Russia's invasion of Ukraine has come with a heavy price for the government. Western sanctions have isolated it from the international financial system and choked off demand for many of its key exports. Sanctions have cut off Russia's access to much of its foreign reserves, threatening to plunge the country into default as it could struggle to meet its foreign debt payments. The ruble has plummeted to record lows and the country's stock market has been paralyzed for weeks. S&P Global this week cut Russia's credit rating to "CC", which it defines as "default imminent with little prospect for recovery." It's not just the government that will struggle to raise capital on the global market. Sanctions have thrown the future of many of its biggest companies into doubt. S&P Global said this week it had made 121 changes to the ratings of companies that cited the Russia-Ukraine war, rising energy prices, or both as reasons. Of that total, 77 were Russian. "In terms of creditworthiness, the Russian-Ukraine conflict has had the largest impact on banks, with 28% of total related rating actions," the agency said.

Formerly lucrative firms, such as banks, energy producers and mining companies, have been reduced to junk status. Commodity traders are deliberately shunning Russian shipments of key raw materials and countries are scrambling to wean themselves off Russian energy supplies. The agency said there are already 30 "fallen angels" as a direct result of the Russia-Ukraine conflict. The term refers to an issuer whose credit rating has been cut from investment grade to speculative grade, also known as junk. Shares in some of the country's biggest corporates no longer trade in New York or London, where stock in the likes of Sberbank, oil and gas producers Gazprom and Rosneft, and metal producers Norilsk and Rusal, plunged to almost $0 a couple of weeks ago. And it won't end there. S&P Global said there was huge uncertainty around the extent, the outcome and the consequences of Russia's war in Ukraine. "Irrespective of the duration of military hostilities, sanctions and related political risks are likely to remain in place for some time," S&P said. "Potential effects could include dislocated commodities markets--notably for oil and gas--supply chain disruptions, inflationary pressures, weaker growth, and capital market volatility."


Putin was warned numerous times of the severe economic consequences that Russia would experience if it invaded Ukraine.

The Russian people will just have to get used to international isolation and economic pauperism until they find the courage to overthrow Vladimir Putin.
 

bongsaway

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I wonder? Is starving your people to death worse than shooting or bombing them? Punishing your own people for your political ambitions just doesn't seem like a good plan in the long run.
 

Rogue Valley

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I wonder? Is starving your people to death worse than shooting or bombing them? Punishing your own people for your political ambitions just doesn't seem like a good plan in the long run.

Putin is, in essence, a mass murderer. He cares nothing about people.
 
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Some Russian companies are doing quite well, even under sanctions. For example Rusal (its owner is the oligarch Deripaska). Is it because the sanctions are too formal?
 

Rogue Valley

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Some Russian companies are doing quite well, even under sanctions. For example Rusal (its owner is the oligarch Deripaska). Is it because the sanctions are too formal?

Deripaska stepped down from RUSAL in May 2018, the day after seven board members and the chief executive resigned.


 
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Deripaska stepped down from RUSAL in May 2018, the day after seven board members and the chief executive resigned.


in Russia, oligarchs don't just quit their companies. I am sure that even today Deripaska is directly related to Rusal - in fact, though not officially
 

Rogue Valley

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in Russia, oligarchs don't just quit their companies. I am sure that even today Deripaska is directly related to Rusal - in fact, though not officially

Deripaska and RUSAL would be taking an enormous risk with nurturing secret business ties.

I don't believe either is so stupid.
 

Juin

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Some Russian companies are doing quite well, even under sanctions. For example Rusal (its owner is the oligarch Deripaska). Is it because the sanctions are too formal?



The OP article is just bs. Its a parallel universe they live in. The Rouble is still performing well, how is that?
 

phoenix2020

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Sanctions are largely symbolic and will not serve their purpose (compelling Russia to act differently) so long as their economic partnerships with the rest of the world remain rich and vibrant.
 

Juin

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Sanctions are largely symbolic and will not serve their purpose (compelling Russia to act differently) so long as their economic partnerships with the rest of the world remain rich and vibrant.



A new parallel space may be emerging in the world. A pole if you will; splitting the unipolar into a bipolar or multi polar world. S&P ruling is True in one universe, the one where the west reigns Supreme, but False outside that universe.

In other words S&P's jurisdiction is not global
 

Jredbaron96

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The OP article is just bs. Its a parallel universe they live in. The Rouble is still performing well, how is that?

Because there is more to an economy than the performance of its currency.
 

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Russia's got another problem: US-based LNG is arriving in quantities greater than Europe can consume, and prices are plunging, which is the exact opposite of what was feared. Ironically (or not), it might be the US that ends up with the energy price problem this winter, instead of Europe.


If this holds up, then Putin has lost another major point of leverage, which is why I think he's getting even more desperate. Putin's fantasy football team keeps losing.
 

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The OP article is just bs. Its a parallel universe they live in. The Rouble is still performing well, how is that?
The ruble is performing in Russia (however well or badly) on account of maneuvering in a Putin-created bubble that has absolutely no connection to international markets of finance.

If you were not so ignorant of finance and economics (as you have admitted yourself) you'd know that.

But then again you probably do and just suppress this little detail so that your preferred narrative won't suffer.

Fat load of good that does you though.
 

Chagos

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Sanctions are largely symbolic and will not serve their purpose (compelling Russia to act differently) so long as their economic partnerships with the rest of the world remain rich and vibrant.
to the bolded :ROFLMAO::ROFLMAO:
 

Chagos

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A new parallel space may be emerging in the world. A pole if you will; splitting the unipolar into a bipolar or multi polar world. S&P ruling is True in one universe, the one where the west reigns Supreme, but False outside that universe.

In other words S&P's jurisdiction is not global
That, bolded by me, is easily one of the most stupid assessments I've read in quite a while.

For anyone else interested, S&P don't bother with obtaining any jurisdiction on anything, anyone or anywhere, they do ratings and financial markets tend to include those in their considerations of action.

Which here means that Russian debt is junk.
 

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Russia's got another problem: US-based LNG is arriving in quantities greater than Europe can consume, and prices are plunging, which is the exact opposite of what was feared. Ironically (or not), it might be the US that ends up with the energy price problem this winter, instead of Europe.


If this holds up, then Putin has lost another major point of leverage, which is why I think he's getting even more desperate. Putin's fantasy football team keeps losing.
Where the role of US-LNG is certainly not to be belittled (the US is currently most certainly the biggest exporter of LNG) the fall in the gas price is not solely due to this and probably not even crucially.

The problem that many EU countries have is the lack of receiving terminals where LNG can be (re-) converted for further inland transport.

On top of that storage tanks are meanwhile filled to an EU average of 93 pct with Germany (biggest past buyer of Russian gas) even having reached 97 pct and both figures well above forecasts of only two months ago.

Add to that a mild autumn here so far, plus hopes (which the Netherlands gas exchange where prices are "speculated" goes by) that this climate will largely continue and the fact that LNG tankers which currently cannot even discharge (see above) are remaining off shore, thus providing a convenient storage capacity for refilling those terminals that DO exist, once they deplete during whatever sort of winter (Lower price in Europe or not, tankers won't be going any place else since here is where they can still deliver at best price).

On top of which Norway has practically doubled its supply capacity to Germany (a crucial receiver) and can pump more gas to Germany than Nordstream 1 ever could, even if it were operational.

The savings already under way in most countries also don't help a price hike and the EU now finally getting its finger out to accelerate going to alternative energies in the future, also has an effect even today.

Just anecdotal: Spain, where I live, is wringing its hands at not knowing what to do with all the LNG it is getting from N. Africa (traditionally) but France has just given up its resistance against a pipeline that will supply the rest of Europe from Spain via French waters of the Med.

So the problem doesn't look to be shortage.

As to the US, I reckon your worries are unfounded. It has the stuff coming out of its ears.

And yeah, all this screws Putin even more.
 
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Deripaska and RUSAL would be taking an enormous risk with nurturing secret business ties.

I don't believe either is so stupid.
Oleg Deripaska is a founder of EN+ (this company is a part of Rusal actually) and Deripaska still speaks fro the company EN+. for example, inm September 2022 he congratulated the En+ Group scholarship students and etc.
 

Rogue Valley

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Oleg Deripaska is a founder of EN+ (this company is a part of Rusal actually) and Deripaska still speaks fro the company EN+. for example, inm September 2022 he congratulated the En+ Group scholarship students and etc.

The IMF says the Russian economy will contract 3.4% in 2022. Far worse in 2023. Russia (Putin) has lost the European energy market, a huge and financially sound market.

Asian sales will not recoup such a huge export loss. It seems Putin is demanding that Russia morph to a permanent war economy......

 

Juin

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The IMF says the Russian economy will contract 3.4% in 2022. Far worse in 2023. Russia (Putin) has lost the European energy market, a huge and financially sound market.



Putin has actually done an excellent job with the economy. The western Sanctioneers were all predicting on the average a 10-17% contraction this year. The article below went ballistic with its estimated 45% contraction for the Russian economy.

And may I enquire on the state of the Ukrainian, UK and Polish economies?


<<<Ukraine’s economy is expected to shrink by an estimated 45.1 percent this year, although the magnitude of the contraction will depend on the duration and intensity of the war. Hit by unprecedented sanctions, Russia’s economy has already plunged into a deep recession with output projected to contract by 11.2 percent in 2022.<<<



 

Rogue Valley

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Putin has actually done an excellent job with the economy.

Putin has done jack shit. Elvira Nabiulina has been managing the Russian economy.

And may I enquire on the state of the Ukrainian, UK and Polish economies?

The UK and Poland, even on their worst days, are far healthier financially than shithole Russia.

Russia doesn't have a savior bloc. Ukraine will be rebuilt. (working on using frozen Russian assets in the west for this).

 
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