(Bloomberg) -- Fitch Ratings downgraded Belarus deeper into junk, citing new sanctions and the possibility of additional measures related to the nation's role in Russia's invasion of Ukraine.
The agency cut Belarus rating by three notches to CCC, leaving it on par with Argentina and Ethiopia. The sanctions and Belarus's close economic and financial links to Russia create significant risks to macro-financial stability and raise uncertainty over the country's ability to meet its external obligations, the agency wrote in a statement Monday.
“Fitch is uncertain over the willingness of Russia to provide the financial support we consider necessary for Belarus to meet it 2023 eurobond repayment,” according to the statement. “In addition, public and external finances will be hit amid pre-existing constraints on financing flexibility, macroeconomic performance will deteriorate and geopolitical risks remain elevated.”
Holders of the country's notes are struggling to find buyers as liquidity dried up. Belarus has an $800 million dollar-denominated bond due in February of next year. The country's debt has handed investors losses of 92%, the worst returns in the world so far this year, according to countries tracked by Bloomberg indices.
The Eastern European nation has been hit with sanctions for its involvement in the Ukraine conflict. While the nation's leader Alexander Lukashenko has denied Russia asked Minsk to join the conflict, President Vladimir Putin has forced a much closer unionwith the embattled leader. Also some of the shelling on Ukraine has come from Belarus, according to Ukraine's border guard.
Why Belarus Is in Lockstep With Russia Over Ukraine: QuickTake
Belarus is likely to default over the next 12 months absent an unforeseen positive development, S&P Global Ratings wrote in a statement Friday. The agency cut the country's rating to CCC on Friday, saying international sanctions will significantly disrupt the economy and pose a risk to financial stability. Moody's Investors Service assigned a negative outlook to Belarus in October.
READ MORE: Belarus Creditors Rush to the Exit as Sanctions Hit Russian Ally
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