'Information war'? S&P cuts Crimea's rating to default grade

Standard & Poor's has cut its long-term rating for Crimea, after it failed to pay interest on bonds of $12 million on time. Crimea’s communications minister said the move was part of a broader “information war” against Russia and the Black Sea peninsula.

“On March 21, 2014, the Autonomous Republic of Crimea missed a scheduled coupon payment of Ukrainian hryvnia (UAH) 4.8 million on its UAH133 million bond,” S&P said in a statement.

The agency lowered Crimea to a default 'D' rating from the extremely speculative 'CCC', adding that it’s also withdrawing ratings on Crimea “at the issuer's request.”

S&P added it understood that it was the Ukrainian treasury, where Crimea’s holds its general funds, that didn’t make the payment.

“According to information we have received from Crimean government officials that we understand are managing Crimea's debt, Crimea had sufficient cash in its budgeted general fund on the coupon payment date, and had submitted the necessary documents in advance to the Ukrainian treasury, where the fund is held. We also understand that the Ukrainian treasury did not make the payment,” the rating agency said.

Simferopol regarded the cut in its credit rating as part of an “information war” against the Crimea, the Kryminform news agency quotes the Crimean Minister of Communications Dmitry Polonsky.

"It is one of the episodes of a serial information war against theCrimeaand Russia," Polonsky commented.

The minister also expressed astonishment at why the rating agency measured a rating of a Russian Federation territory instead of assessing the situation of the country as a whole.

"I would advise the staff of rating agencies to study a situation in other countries, for example in Ukraine which already stepped through a pre-default status", Polonsky emphasized.

Moreover, he said that the assessment of the Crimea rating "doesn't have any economic component and is politically motivated".

S&P reduced the forecast on the long-term corporate credit rating of RUSNANO to "BB+" and a short-term rating "B" to negative from stable. It followed a similar downgrade of the sovereign rating forecast for the Russian Federation on March 20.

Another international rating agency, Moody’s, on March 29 revised downwards the sovereign rating of Russia to Baa1, based on theweakening of the Russian economy and the crisis surrounding Ukraine.

The decisions by Moody's and Standard & Poor's to reduce their forecasts on sovereign ratings for Russia should not be seen as serious, Dmitry Peskov, the Russian presidential spokesman said.