Moody's will stop issuing domestic ratings for Russian companies to avoid being caught in a legal crossfire between Moscow and the West.
The Kremlin is set to usher in rules next year that will require agencies to create new, Russia-regulated subsidiaries. Under the regulations, any new rating assignment and withdrawal by these subsidiaries would have to be approved by the country's central bank. This would mean that agencies like Moody's would not be able to withdraw ratings if ordered to do so by foreign governments, potentially putting the firms at loggerheads with western sanctions law.
According to a statement Wednesday, Moody's will withdraw ratings for approximately 150 Russian companies over the course of 2016, citing "legislative changes and other potential restrictions applicable to the business."
Rival rating agency Fitch also seemed unsteady about the Kremlin's pending regulation, telling CNBC in an emailed statement that it would put their subsidiary "in direct conflict" with "regulatory obligations." Last month Bloomberg reported that Fitch was also considering a withdrawal, but in its statement to CNBC, Fitch said they were continuing talks with the central bank and remained "committed to Russia."