Page 85 - RPTRusFeb17

"We believe that the rating for at least a year or two will remain in non-investment grade," the head of division of S&P’s sovereign ratings agency Moritz Kraemer told Reuters .
Currently the only rating agency that has an investment grade rating for Russia is Fitch with a BBB- rating with a stable outlook. Moody’s has a rating of Ba1 with negative outlook, one notch below investment grade.
8.4.1 International ratings - dynamics
International rating agency Moody's upgraded the outlook of more than 20 Russian non-financial institutions to “stable” from “negative," according to a press release from the agency on February 22, Vedomosti reported. Among the companies were, diamond miner and investor darling Alrosa , state-owned energy giant Gazprom , state-owned oil major Rosneft , plane-maker Irkut, truck-maker Kamaz , oil company Tatneft , the state-owned rail monopoly Russian Railways , shipping giant and privatisation candidate Sovcomflot , privately owned gas producer Novatek , privately owned oil company Lukoil , metal company Norilsk Nickel , steel mills MMK , NLMK , Severstal , and telecom companies Megafon and MTS , fertiliser and chemical companies Phosagro and Sibur , as well as a number of other Russian companies and their subsidiaries.
The Negative outlook for the Ba1 rating of gold major Polyus Gold remained unchanged . This was due to the "risk of capex overruns at Polyus Gold's development projects and heightened shareholder distributions, which could drive its free cash flow to a negative territory", Moody's said, as well as "the lack of track record of the company adhering to the anticipated balanced financial policy, following the debt-financed share buyback in 2016". According to the company's latest IFRS report, net debt of Polyus Gold as of end of 2016 jumped to $3.24bn from $364mn at the end of 2015, due to its share buyout programme.
Fitch Ratings assigned an expected senior unsecured 'BBB-(EXP)' rating to the upcoming potential US dollar and RUB loan participation notes (LPN) of Russian Railways (issuer RZD Capital), the agency said on February 16. The final rating will be set upon finalisation of details regarding the amount, coupon rate and maturity of the issue. The notes that are in line with RZD's long-term Issuer Default Rating (IDR) of 'BBB-'/Stable are expected to "constitute direct, unconditional and unsecured obligations of RZD and rank pari passu with all its other present and future outstanding unsecured and unsubordinated obligations", Fitch said. The proceeds of the issue will be used to refinance existing debt and finance regular business activities.
Standard & Poor's upgraded the outlook on Russia's Alfa Bank ( one of the country's largest private banks and a top-10 lender in terms of assets) from Stable to Positive, the agency said on February 20. S&P affirmed the long-term rating of Alfa Bank in foreign and national currency at 'BB', the short-term rating at 'B', and the national scale rating at 'ruAA'. The revision of the outlook on Alfa Bank's rating reflects the agency's view that the bank maintains a high quality risk portfolio which proved to be more stable than that of its competitors, despite the continuing economic problems in Russia. The Positive outlook suggests that S&P could upgrade the long-term rating of the bank in the coming 12-24 months, should the risk portfolio continue to improve.
85 RUSSIA Country Report February 2017 www.intellinews.com