The ‘C’ rating reflects Fitch’s view that a sovereign default is imminent.

This rating action follows our downgrade of the Long-Term Foreign-Currency IDR to ‘B’/Rating Watch Negative on 2 March, and developments since then have, in our view, further undermined Russia’s willingness to service government debt.

This includes the Presidential Decree of 5 March, which could potentially force a redenomination of foreign-currency sovereign debt payments into local currency for creditors in specified countries. In addition, the application of Central Bank of Russia regulation has restricted the transfer of local-currency OFZ debt coupons to non-residents since late last week.

More generally, the further ratcheting up of sanctions, and proposals that could limit trade in energy, increase the probability of a policy response by Russia that includes at least selective non-payment of its sovereign debt obligations.