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Crisis Hasn’t Affected Russia’s Sovereign Score
Moody’s Investors Service commented on the situation on Russia’s financial markets. So far, the crisis hasn’t undermined the country’s sovereign score that is still at Baa1.
The recent financial turmoil on Russia’s markets hasn’t undermined the RF sovereign score of Baa1 by Moody’s, which is the lowest level of investment category. Despite the decline on local stock markets and substantial outflow of capital, the balance of Russia’s government is solid, macroeconomic policy is relatively consistent and the accelerated economic growth has yielded its dividend.
The prolonged clashes of TNK-BP holders, Putin’s attack on Mechel and military confrontation with Georgia have shattered confidence of nonresident investors in Russia’s economy, according to Moody’s.
But “in spite of a precipitous decline in local stock markets and a substantial outflow of capital in recent weeks, the government's foreign exchange assets are still extremely large and can withstand the substantial costs of financial intervention,'' said Jonathan Schiffer, Moody's lead sovereign analyst for Russia and the CIS,
According to Schiffer, Russia’s authorities are to come up with additional mechanisms and incentives to ensure that the funds reach companies that are in extreme need of liquidity.
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