International rating agencies Fitch and S&P on Friday will announce results of planned revision of the sovereign rating of the Russian Federation. The presumed negative Outlook of the agencies does not allow to speak about possibility of a rating upgrade.
MOSCOW, 15 Oct. International rating agencies Fitch and S&P on Friday would confirm Russia’s sovereign rating at current levels, the acute phase of the economic downturn in the country passed, the geopolitical risks are reduced, and the interest of foreign investors is maintained, the analysts surveyed.
On Friday, Fitch and S&P will report on the outcome of the planned revision of the rating of the Russian Federation. At the present time of the “big three” rating agencies, only Fitch assesses the rating of the Russian Federation as an investment: “BBB-” corresponds to the lower degree of INVESTRATING. S&P assesses rating to “BB+”, which corresponds to a speculative category. The prognosis for both agencies is negative, which does not allow to speak about possibility of a rating upgrade in the upcoming revision.
The head of the Ministry of economic development Alexei Ulyukayev said earlier that he does not expect the revision of the sovereign rating of Russia by Agency Fitch downward. The Deputy Minister of economic development of Russia Nikolay Podguzov also sees no reason for negative action against a sovereign rating of the Russian Federation of Fitch and S&P.
Agree with them and the member of the management Board of Gazprombank Ekaterina Trofimova, who leads the group on creation of national rating Agency. “I believe that the prerequisites for reducing the sovereign ratings of no, the overall situation has stabilized, the volatility remains, but within and even better than the previous expectations and forecasts of rating agencies,” said mills earlier.
“In the current situation, you can expect just anything. However, even now the rating, which is Russia, is unreasonably low. Yes, our economy shows the lowest levels in recent years… We will have in the coming years to remedy this situation. But this situation has nothing to do with the investment attractiveness in General, and risks,” says managing partner of Ernst & young on Russia Alexander Ivlev.
Ivlev noted that oil prices and the exchange rate of the ruble are less vulnerable to speculative leaps. “As far as I know, none of the system-forming Russian companies or the largest banks has no signs of default risk”, — the expert continues.
“The revision of Russia’s ratings will take place in several stressful conditions,” says the analyst of ROSBANK Eugene Koshelev. He notes that international financial institutions have recently lowered its growth forecast for the Russian economy in 2015 and 2016. For example, last week the international monetary Fund (IMF) has lowered its GDP growth forecast for Russia for 2015: the fall will be 3.8%, 0.4 percentage points below the July forecast.
In addition, the expert continues, the prospects for commodity markets are the most important for rating agencies, but the reasons for the improvement in expectations about oil prices yet. Fiscal imbalances in Russia remained problematic, despite the controversy in the administrative circles, the expert notes.
The acute phase passed
“However, all these factors speak rather in favor of the fact that the Agency will leave the rating and the Outlook unchanged,” says Koshelev. “The fact that the economic decline in Russia has overcome its acute phase, and the problem of external debt (and thus, possible waste of reserves) went by the wayside,” says Koshelev.
“The Bank of Russia has demonstrated sufficient flexibility in monetary policy, the lack of which was one of the reasons for the downgrade in the beginning of the year, and can already confirm this at the next meeting, continuing the easing interest rate policy,” he said. Improvement of rhetoric in the geopolitical background, we can count on an imminent easing of the sanctions rhetoric, continues Koshelev.
“From both agencies expect a confirmation of the rating at the current level, despite the fact that at the moment of their evaluation of the sovereign rating of Russia compete with each other”, — believes head of the analytical Department of the investment block of “Nordea Bank” Dmitry Fedenkov.
He noted that the date of the last revision of the factors of uncertainty for the Russian economy has been significantly reduced: “Geopolitical discount for the rating, which brought the situation in Ukraine, largely came to naught; the state of commodity markets also stabilized”.
“The debt load of the Federal budget remains low even in the acute fiscal deficits and declining reserves,” said Koshelev.
“The level of sovereign debt default on which actually should reflect the credit rating, remains at low values relative to most developing and developed countries (the budget for next year assumes only partial financing of its deficit through external borrowing),” says Bedenkov, adding that the role of the Central Bank in stabilizing and balancing henrykow economic indicators should also be considered when grading.