Fitch expects Gazprom and other commodity giants in Russia to default

On Saturday, Fitch cut the ratings of gas giant Gazprom, major oil company Lukoil, mining companies Rusal, Polius, Evraz and 23 other companies from B to “mainly CC”, which means that it is “likely” that these companies will default on their financial obligations.

Rating agency Moody’s previously downgraded Gazprom and Lukoil accordingly. The Russian government’s permission to repay debts to the so-called hostile countries in rubles threatens the ability of these companies to repay their creditors on time.

Moscow’s list, drawn up in response to mounting Western sanctions over the invasion of Ukraine, includes European Union countries, Australia, the United Kingdom, Canada, Monaco, South Korea, the United States, Switzerland and Japan.

At the beginning of March, three major rating agencies ranked Russia’s long-term debt in the category of countries that may not be able to pay their debts due to the mounting sanctions against the country. Later Fitch downgraded the credit rating further, which means that the risk of a sovereign default was “imminent” in their eyes.