26 Apr 2014

Russian rating cut by S&P

5:14 am on 26 April 2014

Standard & Poors has cut Russia's credit rating, warning of capital flight and risks to investment due to the crisis in Ukraine.

The credit ratings agency cut Russia's sovereign long-term rating to BBB minus - just above junk territory.

It also said further downgrades were possible if the West imposed tighter sanctions against Moscow in response to the crisis in Ukraine.

Moscow said politics had played a role in the downgrade, which was the the first since Russia annexed Crimea from Ukraine after a referendum on 16 March.

Foreign investors have been pulling money out of Russia since the economy hit the rails last year, taking $US63.7 billion with them in the first three months of this year.

The downgrade was the first on Russia's sovereign debt since December 2008.

Russia later unexpectedly raised interest rates for the second time in two months on Friday. The central bank raised its key rate by 50 basis points to 7.5 percent