Russian-Ukrainian Tensions May Negatively Impact CIS Countries, Including Armenia, According to Moody's

The presence of Russian troops along the Ukrainian border is raising the stakes of escalating tensions between the two countries and the potential for new Western sanctions against Russia, according to Moody's rating agency. The agency forecasts that this situation could adversely affect the economic, financial, and energy ties of CIS countries with Russia.

“However, significant pressure on ratings is likely only if strict sanctions lead to a substantial slowdown in the Russian economy or serious disruptions in energy supplies,” the agency noted, adding that both scenarios are considered unlikely.

The greatest risks are expected for Belarus, Kyrgyzstan, Tajikistan, Moldova, and Armenia. In a previous forecast, Moody's indicated that just an “invasion” could trigger a downgrade of Russia's sovereign rating. Fitch has also stated that strict sanctions against Russia could have negative implications for the country's sovereign rating as well as the ratings of Russian banks.

In recent months, relations between Russia and the West have intensified, especially with the deteriorating situation surrounding Ukraine. Washington and Brussels accuse Moscow of preparing for an “invasion,” claiming that Russian troops are approaching the borders of the neighboring state. In this context, NATO is reinforcing its presence in Eastern Europe and sending additional troops to the region.

The Kremlin denies all allegations, asserting that they are merely a pretext for the alliance to strengthen its military presence near Russian borders.