19 Jan 2015
Downgrades Russia Close to Speculative Grade - Moody's
FXStreet (Mumbai) - International rating agency Moody's Investor Service has downgraded the rating of Russia to Baa3/Prime 3 (P-3) from Baa2/Prime 2 (P-2), the lowest level within investment grade territory. Moody's also said it has placed Russia's rating on review for further downgrade.
Key Quotes:
"In the review for further downgrade, Moody's will assess the resiliency of the government's balance sheet, in particular its foreign currency reserves cushion, to both the rating agency's baseline forecast for oil prices and to the risk of a further decline in oil prices at a time when international market access is restricted for Russian borrowers due to sanctions. The review will also focus on the efficacy of policy actions that the Russian central bank and fiscal policymakers may take to address the oil and exchange rate shock in an effort to preserve economic and government financial strength,"
"The negative outlook reflected the fragile nature of that balance, with both the growth outlook and the government's fiscal position exposed to further shocks that could more profoundly undermine consumer and investor confidence, hastening the erosion of fiscal and foreign currency buffers,"
"The hike in interest rates that took place in December and rapidly rising inflation, which will inhibit the central bank from easing rates in the coming months, will further squeeze consumers' disposable incomes."
Key Quotes:
"In the review for further downgrade, Moody's will assess the resiliency of the government's balance sheet, in particular its foreign currency reserves cushion, to both the rating agency's baseline forecast for oil prices and to the risk of a further decline in oil prices at a time when international market access is restricted for Russian borrowers due to sanctions. The review will also focus on the efficacy of policy actions that the Russian central bank and fiscal policymakers may take to address the oil and exchange rate shock in an effort to preserve economic and government financial strength,"
"The negative outlook reflected the fragile nature of that balance, with both the growth outlook and the government's fiscal position exposed to further shocks that could more profoundly undermine consumer and investor confidence, hastening the erosion of fiscal and foreign currency buffers,"
"The hike in interest rates that took place in December and rapidly rising inflation, which will inhibit the central bank from easing rates in the coming months, will further squeeze consumers' disposable incomes."