Saturday, July 13

Sovereign credit rating of Russia increased to the level of investment grade

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International rating agency raised sovereign credit rating of Russia

Sovereign credit rating of Russia was highly appreciated by Moody’s international agency. Now it is no longer “trash” (level Ba1), but is recognized as an investment (Baa3), which also has a stable outlook.
The other two largest organizations, Fitch and Standard&Poor’s, have previously given the same assessment of Russia. It turns out that all 3 leading rating agencies recognize the Russian economy as favorable for investment. Now investors, who previously refused to invest in the state, can change their mind, relying on the decision of specialized experts.

What factors influenced Moody’s decision to raise the sovereign credit rating of Russia?

The agency representatives took into account the efficiency of political structures of the Russian Federation in managing the country’s economy. It is noted that the authorities managed to avoid large-scale negative consequences of sanctions and considerable losses from oil price decrease. Besides, even a possible new package of sanctions, which America may impose against Russia, the country’s economy should survive.
Nevertheless, Moody’s outlook on Russia’s future credit rating is still modest. Experts believe that, nevertheless, some sanctions will shake it. In particular, a ban on American companies from buying and owning Russian government bonds and bank bonds.

However, the Russian Federation will not feel the global negative consequences of this. According to the analysts of the agency, the representatives of the authorities have learned to resist the external strikes and established the balance of payments. In particular, the volume of foreign currency reserves of Russia allows it to compensate 80% of its external debt. The experts also praised the implemented pension reform and compliance of the chief financiers of the Russian Federation with the budget rule.
The news that Russia’s sovereign credit rating has been upgraded to the investment level will have a restrained but positive impact on local financial markets, experts assure. Positive shifts in the federal loan bond niche can be expected, but no significant leaps are expected here. Mainly due to the fact that Moody’s does not rule out risks associated with the U.S. Congress sanctions policy. Nevertheless, positive assessments by the world’s top three rating agencies give a green light to investors who have previously refrained from contributing to the Russian economy.


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