Fitch affirms restricted default rating for Belarus

April 17, BPN. Fitch Ratings has affirmed Belarus’ Long-Term-Foreign-Currency Issuer Default Rating (IDR) at “RD” (restricted default).

The rating “reflects the ongoing payment of US dollar Eurobond obligations in local currency,” with the most recent payment made in late February, Fitch noted. This practice violates bond conditions that prohibit settlement in alternative currencies, the agency added.

In late June 2022, the Belarusian government and the National Bank declared their intentions to service Belarus’ foreign debt in Belarusian rubels. The finance ministry reported the next day the first rubel payment of interest on the 2027 Eurobond denominated in US dollars.

In early July, Citibank, N.A. of London announced that it will stop servicing payments on Belarus’ Eurobonds amid Western sanctions.

Shortly after, rating agencies Fitch and Moody’s downgraded Belarus’ credit rating: the former said its default was inevitable, and the latter described the rubel payment as a default.

The Belarusian Ministry of Finance criticized those decisions and continues to pay debts in Belarusian currency.

Fitch, along with Standard & Poor’s (S&P) and Moody’s, is one of the so-called “Big Three” international rating agencies.