Russia’s Central Bank has announced it will use credit ratings of lenders before March 1 of last year (2014) in determining its capital requirements, artificially easing pressure on debt ridden Russian companies struggling for refinancing. Without access to Western capital markets, companies have either been forced to accept egregiously high interest rates from non-Western banks, or rely on subsidies from the Russian government. With Russian dollar reserves still in the hundreds of billions, the government has been propping up companies and industries that would have otherwise needed to default, averting a banking crisis.

Credit ratings are often used to calculate risk weightings for loans – and the fact that the Russian Central Bank is reverting to old ratings all but confirms that most Russian private (and public debt) is in danger of becoming junk. While this sends yields skyrocketing, it raises the risk that  interest coupons will be unable to be paid.

Western ratings agencies have been, one after another, downgrading Russian government debt. The largest of these, Standard and Poor’s, announced that it is 50% likely to cut the sovereign to junk for the first time since Russia’s recovery from the 1998 financial crisis.

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News Briefs:

• Kyrgyzstan’s National Bank has announced it will close down its currency exchange offices around the country in order to preserve the value of the som relative to other currencies utilized by the population, like the Russian ruble or the Chinese yuan (RMB). The bill is being put forward to the Kyrgyz Parliament this week.

• Another border clash between the border police of Kyrgyzstan and Tajikistan has resulted in one death and two casualties. Border guard spokesman Gulmira Borunbaeva said that the Aykol border post in Batken province was attacked in the evening of January 16. Border disputes are still common as many sanctions of the region are still not demarcated.

• An Uzbek whistleblower has called out Norwegian telecommunication companies about millions of dollars’ worth of alleged bribes. The Norwegian Ministry of Trade, Industry, and Fisheries said it forwarded these complaints to the Norwegian telecom company Telenor after receiving an anonymous letter on January 13. The received documents point to transactions between the mobile operator Vimpelcom and a Gibraltar based company accused of being a front for Gulnara Karimova, the disgraced daughter of current Uzbek President Islam Karimov.

• The Afghan nominee for Agricultural Minister, Mohammad Yaqub Haidari, is wanted by Interpol on charges of tax evasion in Estonia. Afghan President Ashraf Ghani has insisted he knew nothing of these charges at the time of his nomination – although Haidari has been on the Interpol list for years now, it was not a widely shared fact in Afghanistan. This comes at an awkward time for Ghani’s administration, who have promised to rid the government of widespread corruption that was a hallmark of the previous Karzai administration.

• A Tajik border guard has been injured on the Afghan border after a firefight in which an armed group that was apparently trying to cross the border into Tajikistan. Officials say the evidence points to armed narcotics smugglers, but some offer dissenting opinions that armed militia groups that have been growing in size in northern Afghanistan could be responsible, pointing to a potential spillover of religious violence in the rest of Central Asia.

• According to Moscow news media, Ukrainian President Petro Poroshenko rejected a peace proposal put to him by Russian President Vladimir Putin, according to a statement released by his spokesman Dmitry Peskov, noting that a written address was sent last Thursday night in which a concrete plan was proposed to both sides in the conflict to withdraw heavy artillery. Kiev has made no statements on the veracity of this claim.

• South Carolina Senator Lindsey Graham, a prominent Republican, announced he is pushing forward with legislation for new penalties on Iran should negotiations fail, unswayed by a White House veto threat and pleas from European allies. Graham’s main bargaining chip is the proposal that any agreement to Tehran would be submitted to Congress for approval, an idea which executive officials derided as an abnegation of presidential authority over foreign policy.

• Protesters in Kiev’s Independence Square marched for peace in Ukraine today, chanting the slogan “I am Volnovakha” in memory of 13 passengers who died in the bus explosion after a separatist bombardment. In attendance were several Ukrainian key officials, notably President Poroshenko, who reassured the crowds that “we will not give up a single meter of our land.” Western media reported this as a “protest,” despite the fact that it looked to be a government-organized demonstration to promote solidarity, rather than a spontaneous gathering akin to the Maidan protests of winter 2013-2014.