Credit ratings agency Standard & Poor’s lowered Russia’s foreign currency sovereign credit rating a notch, citing capital flight, according to Hürriyet.

The U.S.-based ratings agency said it has lowered its foreign currency sovereign credit ratings on Russia to BBB/A-3 from BBB+/A-2, with a negative outlook.


Russia’s international reserves have dropped from $583 billion to $455 billion since August as the government has spent billions to prop up the ruble currency, weakened by plunging oil prices.


S&P’s credit analyst Frank Gill said in a statement Monday that "the lowering of the ratings on Russia reflects risks associated with the sharp reversal in external portfolio and other investment flows, which has increased the cost and difficulty of meeting the country’s external financing needs."


The global financial crisis has hit Russia hard, leading to an outflow of foreign capital, job losses, a gradual devaluation of the ruble and a credit squeeze.


A BBB rating means that long-term foreign currency debt owed by Russia is adequately protected but adverse economic conditions could lead to a weakened capacity to meet its financial commitments on paying back the debts.


The A-3 rating is a similar rating to BBB but applies to short-term debt.


Standard and Poor’s also lowered the long-term local currency rating to BBB+ from A-.


It said that since August 2008, Russia’s international reserves have fallen from 583 billion dollars to 455 billion dollars as the central bank has spent billions propping up the ruble as investors moved their funds to safer havens.


"The negative outlook reflects the likelihood of a downgrade if the banking crisis and external pressures continue to impair the government’s balance sheet," the agency said.


Russia’s economy went into near meltdown in 1998 when the state defaulted on its debt but the country’s leaders have vowed to do everything to ensure the current crisis does not lead to a major economic shock.