S&P affirms junk rating of Russia


Rating Agency S&P confirmed the rating of Russia to “junk” level of BB+ with a negative Outlook, said in a statement S&P received .

In justifying its decision, the Agency cited the deterioration of private expectations on the price of oil in 2016-2019. In October last year, analysts had expected that in 2016 the average price of oil will be $55 and will increase to $70 in 2018. However, now they believe that the price of oil in 2016 will be $40, and by 2018 will increase to $50.

The decision to freeze the level of oil production, which yesterday received representatives from Russia, Qatar, Venezuela and Saudi Arabia, will not significantly affect the price of a barrel, according to S&P. “We noticed that the first market reaction to this news was a further decline in oil prices,” — noted in the Agency.

The prospects of Russia’s economic growth to prevent the decline in purchasing power, say analysts. As noted in the S&P forecast, the sanctions against Russia “will remain in place” if not resolved the conflict in Ukraine.

In October, S&P assumed that Russia’s budget deficit will be 2.8% on average in 2016-2019. However, now the figure in the forecast the Agency has increased to 3.5%.

Average annual growth of GDP in 2016-2019 will be 0.5% versus the previously expected 1%. The S&P forecast the GDP per capita amounted to $7.7 thousand instead of the earlier projected $8.6 thousand

S&P allows for the improvement of the Outlook to stable if notice of the improvement in the financial situation and economic prospects of the country. Lower ratings Agency may, if geopolitical events will lead to a substantial tightening of sanctions against Russia. However, in S&P called such a development unlikely.

S&P downgraded Russia to the level of BB+ in January 2015. behind him a rating of Russia to speculative grade also lowered Moody’s.