Page 91 - RusRPTJul20

Fitch has been a lot more upbeat on Russia and has consistently ranked if with a treble B rating since 2004 of one sort or another, as it take more account of Russia rock solid fundamentals – the low external debt and large currency reserves. The lowest rating it had was CCC in August 2008 following the currency meltdown. The highest rating was Baa1 in March 2013 thanks to the economic rebound that year.
Standard & Poor’s (S&P) rates both Russia’s foreign debt at BBB-​ with stable outlook and the local debt at BBB.
S&P has also been fairly consistent on Russia’s rating. Its lowest grade was BB+ (negative) awarded in January 2015. The highest was BBB awarded in December 2008.
8.5 ​Fixed income
Good news for Russia's Finance Ministry: Russia can borrow cheaper than ever before​ to cover this year's deficit. Interest rates on 10-year government bonds (ruble-denominated) fell to 5.4% in June 2020, after briefly spiking to 8.4% in March.
There were no OFZ redemptions in April, while new issuance was solid,
at RUB357bn (in March, there was zero new supply). Banks’ OFZ portfolio (excl. Treasury repo) was up RUB195bn, with the ‘Big 4’ banks accumulating RUB285bn and non-resident banks increasing their portfolio RUB52bn. Banks from the FCBS group, by contrast, reduced their OFZ holdings RUB161bn.
By May and June the OFZ market had stabilized. ​The total volume of issues ticked up to RUB3,058bn as of June 1 with the share of non-residents in the market stable at 31.6%-31.8% for the last three months, down from the recenthigh of 34.9% set in March before the current crises broke.
Russia’s local debt market has become the most popular in the world
with the highest share of non-residents invested of any emerging market. The Russian market offers the irresistible combination of high yields and extremely low chance of default in a world of near-zero interest rates.
91​ RUSSIA Country Report​ July 2020 ​ ​www.intellinews.com