Standard & Poor's Upgrades Russia's Sovereign Debt Rating to Investment Grade
The Standard & Poor's Ratings Group increased Russia's sovereign debt rating to investment grade Monday, a long-awaited move driven by Russia's oil-fueled budget surplus and soaring hard currency reserves.
Jan 31, 2005
MOSCOW (AP) -- The Standard & Poor's Ratings Group increased Russia's sovereign debt rating to investment grade Monday, a long-awaited move driven by Russia's oil-fueled budget surplus and soaring hard currency reserves.
By upping its rating from BBB- to BB+, the Standard & Poor's decision means Russian sovereign debt has now been granted investment-grade status by all of the big three ratings agencies, which include Moody's Investor Services and Fitch Ratings.
Standard & Poor's credit analyst Helena Hessel said there had been no change in Russia's political risks, as exemplified by the high-profile hobbling of the Yukos oil giant, but they were overshadowed by what she called the "crucial improvements in the government's debt level and external liquidity."
"These improvements are so significant that they now outweigh the serious and growing political risk that continues to be a key ratings restraint on Russia," she said in a statement.
Russia's benchmark RTS exchange was up 1.96 percent on the news at 637.43 in early afternoon trading Monday.
The decision will remove the restrictions for many international funds, which can only invest in a country's sovereign bonds if they have investment grade status from all three agencies.
"It's the right justification," said Al Breach, an economist at Brunswick UBS. Breach noted that Russia's currency reserves stand at some US$120 billion (euro92 billion), while the country had a budget surplus of US$25 billion (euro19 billion) last year.
"The risk of these guys defaulting on their sovereign bonds is nil," he said.
http://biz.yahoo.com/ap/050131/russia_rating_1.html
By upping its rating from BBB- to BB+, the Standard & Poor's decision means Russian sovereign debt has now been granted investment-grade status by all of the big three ratings agencies, which include Moody's Investor Services and Fitch Ratings.
Standard & Poor's credit analyst Helena Hessel said there had been no change in Russia's political risks, as exemplified by the high-profile hobbling of the Yukos oil giant, but they were overshadowed by what she called the "crucial improvements in the government's debt level and external liquidity."
"These improvements are so significant that they now outweigh the serious and growing political risk that continues to be a key ratings restraint on Russia," she said in a statement.
Russia's benchmark RTS exchange was up 1.96 percent on the news at 637.43 in early afternoon trading Monday.
The decision will remove the restrictions for many international funds, which can only invest in a country's sovereign bonds if they have investment grade status from all three agencies.
"It's the right justification," said Al Breach, an economist at Brunswick UBS. Breach noted that Russia's currency reserves stand at some US$120 billion (euro92 billion), while the country had a budget surplus of US$25 billion (euro19 billion) last year.
"The risk of these guys defaulting on their sovereign bonds is nil," he said.
http://biz.yahoo.com/ap/050131/russia_rating_1.html