S&P Cuts Russia's Rating to Junk, Moody's Issues Junk Warning

The S&P logo. Reuters
The S&P logo. Reuters
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S&P Cuts Russia's Rating to Junk, Moody's Issues Junk Warning

The S&P logo. Reuters
The S&P logo. Reuters

Russia's invasion of Ukraine triggered a flurry of credit rating moves on Friday, with S&P lowering Russia's rating to 'junk' status, Moody's putting it on review for a downgrade to junk, and S&P and Fitch swiftly cutting Ukraine on default worries.

Both countries' financial markets have unsurprisingly been thrown into turmoil by this week's events, which rank as the biggest military attack in Europe since World War Two, bringing stiff Western sanctions on Moscow.

S&P lowered Russia's long-term foreign currency credit rating to 'BB+' from 'BBB-', and warned it could lower ratings further, after getting more clarity on the macroeconomic repercussions of the sanctions.

"In our view, the sanctions announced to date could carry significant negative implications for the Russian banking sector's ability to act as a financial intermediary for international trade, Reuters quoted S&P as saying.

It also cut Ukraine's rating to 'B-' from 'B'.

Russia now has an "investment grade" rating of Baa3 from Moody's and an equivalent BBB- from Fitch, due to one of the lowest debt levels in the world at just 20% of GDP, and nearly $650 billion of currency reserves.

A downgrade, however, would lower that rating to the riskier "junk" or sub-investment grade category.

"The decision to place the ratings on review for downgrade reflects the negative credit implications for Russia's credit profile from the additional and more severe sanctions being imposed," Moody's said in a statement.

Sovereign rating reviews can take months but this time are likely to be quicker.

Moody's said its decision would factor in the scale of the conflict and the severity of additional Western sanctions, which have already hit some of Russia's top banks, military exports and members of President Vladimir Putin's inner circle.

It added it would also weigh the degree to which Russia's substantial currency reserves are able to mitigate the disruption stemming from the new sanctions and lengthy conflict.

"Moody's will look to conclude the review when these credit implications become more clear, particularly when the impact of further sanctions takes shape in the coming days or weeks," it said.

Moody's also put Ukraine's already-junk "B3" rating on review for a downgrade.

Fitch did not wait, however, and moved immediately to slash its Ukraine rating by a whole three notches to "CCC" from "B".



Saudi Arabia’s Mandatory List Boosts Local Companies in Government Procurement

A factory in Saudi Arabia (Asharq Al-Awsat)
A factory in Saudi Arabia (Asharq Al-Awsat)
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Saudi Arabia’s Mandatory List Boosts Local Companies in Government Procurement

A factory in Saudi Arabia (Asharq Al-Awsat)
A factory in Saudi Arabia (Asharq Al-Awsat)

Saudi Arabia’s Mandatory List has emerged as a strategic lever to strengthen the role of local businesses in public sector procurement.

Designed to drive demand for Saudi-made products, the list not only expands market opportunities for domestic manufacturers but also ensures that government entities procure reliable goods that meet stringent quality standards.

Last year, government tenders that included items from the list surpassed 46,600, with a combined value of SAR67.6 billion ($18 billion).

The Local Content and Government Procurement Authority has been steadily updating the list, adding about 407 new products in 2024.

This week, officials announced a further expansion, introducing 105 additional products across seven key sectors: pharmaceuticals and medical supplies, construction, transportation and logistics, furniture, cybersecurity, and information technology.

Authorities say this effort underscores a broader commitment to make local content a cornerstone of Saudi Arabia’s future economy. By prioritizing Saudi products, the government aims to empower national industries, spur innovation, and increase job opportunities while reducing reliance on imports.

The latest update is also part of policies favoring small and medium enterprises (SMEs) and companies listed on the Saudi financial market.

The initiative seeks to strengthen local supply chains and raise the readiness of domestic factories to fulfill public sector demand.

According to the Authority, expected government spending on the newly added products exceeds SAR2.3 billion ($613 million). More than 100 Saudi factories are already equipped to meet this anticipated demand.

These measures form part of broader efforts to maximize the economic impact of public spending. In the second half of last year alone, a series of new policies, strategic agreements, and national programs contributed to economic gains exceeding SAR80 billion ($21.3 billion).

The Authority also integrated local content requirements into 54 privatization projects valued at SAR269 billion ($71.7 billion). Of these, 24 projects have already achieved their targets, representing overSAR 131 billion ($34.9 billion) in contracts aimed at boosting private sector participation and employment.