May be higher: S&P’s rating of Russia was not surprised business

© AP Photo / Henny Ray AbramsЗдание headquarters of the rating Agency Standard & Poors in new York, USA. Archival photoMay be higher: S&P’s rating of Russia was not surprised business© AP Photo / Henny Ray Abrams

The decision of international rating Agency S&P to confirm the rating of Russia was not surprised by representatives of government and business, however, they believe that the country has all the chances in the short time to reach the investment grade rating due to improvement in the economy.

S&P on Friday affirmed its long-term sovereign rating of Russia to «BB+» with positive Outlook, which corresponds to the highest rung of the speculative category.

Russia’s Finance Minister Anton Siluanov, commenting on the decision of the Agency, said that foreign investors are willing to come in Russian assets, despite the «junk» rating of Russia. According to him, foreign investors are attracted by the high adaptability of the economy and the maturity of the macroeconomic policy in Russia.

«I think the discrepancies in valuation between the investment community and rating agencies cannot be sustained, and the strengthening of positive trends in the Russian economy, they come to naught», — said the head of the Finance Ministry.

The positive Outlook indicates the possibility to increase the ratings of the Russian Federation, if the trend of economic recovery will continue or if the continued stabilization of the financial sector transformirovalsya in credit growth in the banking sector, signs of which are already visible.

At the same time, the forecast may be degraded to stable, and the rating downgraded «in the event of geopolitical events that will lead to a significant tightening of sanctions by foreign governments against Russia, or if carried out at the moment, measures to maintain financial stability will entail higher fiscal costs, and if deteriorate the credibility of its monetary policy and its effectiveness,» explained S&P.

The Agency on Friday also revised the assessment of risk of transfer and convertibility to ‘BBB -‘ from ‘ BB+’. This reflects the Agency’s view that the probability of limiting the government’s access to foreign exchange operations necessary to service and repay debt of the Russian non-sovereign borrowers, slightly lower compared to the probability of sovereign default.

«The currency regime in Russia has become much more flexible and market oriented compared to the previous period. In addition, during the economic crises of the past decade the government has demonstrated non-interference in this sphere», — stated in the message.

However, low commodity prices will put pressure on long-term growth prospects of the Russian economy. In addition, in its forecast of the Agency is based on the preservation of Western sanctions against Russia until 2020.

The head of the Ministry of the Russian Federation Maxim Oreshkin earlier in September said that the macroeconomic situation, low inflation and stability in foreign exchange market allow Russia to have higher sovereign ratings from international agencies. According to the Minister, some countries with a higher ranking have a much worse situation from the point of view of macroeconomic dynamics, economic growth and its sustainability.

The head of the Central Bank Elvira Nabiullina also said earlier that the Bank of Russia sees quite a lot of positive factors, which objectively characterize the progress in the economy of the Russian Federation.

«The economic situation is improving, we have accumulated foreign exchange reserves. On the other hand, quite a lot of speculative money will be taken out of Russia because of the sanctions of the West, it will put pressure on the ruble,» — commented the decision of the Agency the President of the organization of small and medium entrepreneurship «OPORA Russia» Alexander Kalinin, RIA Novosti.

«Of course, they will also look at reform. If we don’t lose the pace of reform, then the rating increase», — said Kalinin.

Of the «big three» rating agencies today, only a Fitch rating of the Russian Federation as an investment: the value of «BBB-» corresponds to the lowest rung of the ranking. Moody’s assesses the rating of the Russian Federation at the level «Ba1», which corresponds to the speculative category.

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