Fitch Rates Russia as a Reliable Borrower
Yesterday, a year after Moody's, the Fitch international ratings agency raised Russia's sovereign rating up one notch, to investment rating BBB-.
Nov 19, 2004
MOSCOW, Nov 19 (RIA Novosti) - Yesterday, a year after Moody's, the Fitch international ratings agency raised Russia's sovereign rating up one notch, to investment rating BBB-.
Also, Fitch changed its mind on the Yukos affair. It believes that, as President Vladimir Putin promised, it is a one-off, rather than a signal to trounce private business.
This decision opens the way for long-term investments rather than hot money, as has been the case until now, Ruben Vardanian, president of the Troika Dialog investment group, told Vedomosti. "I would not be surprised if Russian securities found their way into the portfolio of a teachers' union in Ohio," he speculates. "Russia should receive some serious money, tens of billions of dollars, that can lead to a manifold increase in the capitalization of local companies."
Fresh investments on the back of the Fitch rating will arrive in Russia before the New Year, believes Alexei Moiseyev, director of the Renaissance Capital think tank. "Many investors close the fiscal year on December 1 and at about the same time review the structure of their portfolios," he noted.
Fitch has not only paved the way to Russia for portfolio investors. Demand will grow for Russian assets overall, note experts. The higher rating will also enable Russian companies to borrow long-term and cheaply to implement investment projects.
The inflow of fresh investment will strengthen the ruble, experts warn, and so the government is unlikely to keep its exchange rate within the declared 28.6-29-ruble/dollar band by the end of the year.
Natasha Page, managing director of Fitch Ratings in Moscow, explained to Kommersant that the principal changes in the past six months include the increase in oil prices, which was higher than expected. This built up international reserves and the reserve fund at an accelerated pace. However, "the investment rating does not mean an improved business climate in Russia," says Ms. Page. In effect, the Fitch rating highlights only one thing: Russia is quite able to pay its debts on time.
Also, Fitch changed its mind on the Yukos affair. It believes that, as President Vladimir Putin promised, it is a one-off, rather than a signal to trounce private business.
This decision opens the way for long-term investments rather than hot money, as has been the case until now, Ruben Vardanian, president of the Troika Dialog investment group, told Vedomosti. "I would not be surprised if Russian securities found their way into the portfolio of a teachers' union in Ohio," he speculates. "Russia should receive some serious money, tens of billions of dollars, that can lead to a manifold increase in the capitalization of local companies."
Fresh investments on the back of the Fitch rating will arrive in Russia before the New Year, believes Alexei Moiseyev, director of the Renaissance Capital think tank. "Many investors close the fiscal year on December 1 and at about the same time review the structure of their portfolios," he noted.
Fitch has not only paved the way to Russia for portfolio investors. Demand will grow for Russian assets overall, note experts. The higher rating will also enable Russian companies to borrow long-term and cheaply to implement investment projects.
The inflow of fresh investment will strengthen the ruble, experts warn, and so the government is unlikely to keep its exchange rate within the declared 28.6-29-ruble/dollar band by the end of the year.
Natasha Page, managing director of Fitch Ratings in Moscow, explained to Kommersant that the principal changes in the past six months include the increase in oil prices, which was higher than expected. This built up international reserves and the reserve fund at an accelerated pace. However, "the investment rating does not mean an improved business climate in Russia," says Ms. Page. In effect, the Fitch rating highlights only one thing: Russia is quite able to pay its debts on time.