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S&P downgrades Russian debit to junk category
Meanwhile, the rating company S&P Global has stripped Russian sovereign debt of its triple B rating, downgrading it to "junk bond": what does this mean? It means that if Russian banks - sanctioned or not - want loans backed by Russian government bonds, they will have to provide more collateral or else the bank will go bankrupt. The Russian central bank is printing rubles to meet the demand for money, but this has already caused inflation to skyrocket and the national currency to lose value. At the same time, Russian interest rates have been raised from 9.5% to 20% to encourage deposits and thus increase guarantees.

But what consequences will all this have? S&P itself has prepared a point-by-point analysis of what the financial sanctions on Russia imply.

Investors, they write, could soon start demanding an "uncertainty premium" in terms of higher returns. The rise in reference rates, combined with widening spreads, could put an end to a historic run of favorable financing conditions. Operational and structural barriers and highly indebted small and medium-sized enterprises could affect credit quality.
The economic recovery after the pandemic could be severely hampered by the current situation, affecting all regions of the world asymmetrically depending on their dependence on Russia. On the other hand, China will not be able to fully replace, and certainly not immediately, Russia's lost exports to the rest of the world, since they only represent 14% of them.
As for the banks exposed to Russia - mainly OTP, Raiffeisen Bank International, Société Générale and UniCredit - S&P is optimistic that they will be able to withstand the blow, as they have in previous stress periods. The same is true of other international banks, which may experience a decline in activity, but continue to hold up thanks to taking advantage of short-term opportunities.
Energy and commodity prices, along with market volatility, could dampen confidence in the economic recovery. However, according to S&P, it will take a much bigger hit to erode the value of the assets of individuals and companies, and consequently the power of banks. However, the risk of an escalation of the invasion that leads to this circumstance is still on the horizon.
The central theme, according to S&P, continues to be energy in Europe. The EU is a net importer of 70% of oil, 19% of natural gas, 6% of LNG and 3% of coal. Of this amount, a quarter comes from Russia; specifically, 47% of gas and 25% of oil. The question is therefore how quickly Europe can replace all this by diversifying its sources of supply: it may be years before investment in renewable or even nuclear sources becomes a reality.