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Moody’s Raises Russia’s Rating
Moody’s international rating agency has raised Russia’s rating from Baa2 to Baa1 with a positive outlook, according to an agency press release. This is the first time Moody’s has raised Russia’s rating since October 2005. The Baa1 rating has been assigned to government bonds and the country ceiling for foreign currency deposits. At the same time, the A2 rating was changed to positive as well. That is for the country ceiling for foreign currency bonds. The country ceiling for local currency bonds is A1 with a stable outlook. Moody’s noted that Russia has accumulated a significant volume of assets in foreign currency in the last nine years and paid down its state debts to insignificant levels.
Moody’s analysts expect Russian President Dmitry Medvedev to continue and maybe even improve on the economic policies of Vladimir Putin, his predecessor who is now prime minister. They expect the two to work together in politics as well and note that the transfer of power has reduced political risks in the country. Progress in diversifying the economy also garnered praise. The agency expects Russia to show steady economic growth in the middle range, in spite of a shortening trade balance and budget surplus. The most important things for the government to do are to rein in inflation and improve the business climate.
Observers do not expect the new rating to affect the value of Russian debt, since the change was long expected on the market. Moody’s also raised to Baa1 the ratings of ten Russian banks: VTB Bank, VTB Bank Severo-Zapad, VTB-24, DeltaCreditBank, Rosselkhozbank, Sberbank, Vneshekonombank, Gazprombank, Bank of Moscow and ZAO Raiffeisen Bank.
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