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bne October 2019 Eastern Europe I 51
the currency meltdown. The highest rating was Baa1 in March 2013 thanks to the economic rebound that year.
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.
But ACRA has given Russia a significantly higher rating as Russia has never won
a “A” level rating from any of the interna- tional ratings agencies despite having one of strongest macroeconomic fundamen- tals of any major economy in the world.
The main use of sovereign ratings is as a tool for bond investors to judge the likelihood that a country will default on its bonds and so the rating plays
a big role in pricing bonds.
There is actually a long standing argu- ment over Russia’s ratings as a cursory glance at its fundamentals suggests that it is very unlikely to default on its bonds.
Analysts at Raiffeisen carried out a study several years ago looking at Russia’s macrofundamentals prior to the 2008 crisis and concluded that the country deserved a “A” rating thanks to its low debt and enormous gross international reserves (GIR), which were just shy of $600bn in those days.
Raiffeisen’s faith in Russia was borne out by the 2008 global crisis that saw the Russian economy go from 7% growth to a 7% contraction in the space of six months – a 14 percentage point contraction in a matter of months –
yet neither the state nor the companies defaulted on their debt.
Indeed, even in the 1998 crisis – arguably an even more painful crash as Russia had almost no reserves in those days – technically speaking Russia didn't default on its $40bn worth of GKO bonds but simply placed a five-year moratorium on paying out on them placing them in special “S” accounts: a technical default. In the end after five years the state did make all the payments and as a scheme
was introduced where GKOs could
Ukraine central bank brands attacks on former governor as 'terror' against reformers
IntelliNews Pro
The board of the National Bank of Ukraine (NBU) has branded a series of attacks on its former governor Valeria Gontareva, her family and property as "no longer a series of incidents", but "terror".
"The board [...] publicly declares the unacceptability of these purposeful, systematic attacks on the ex-governor of the central bank [...] and, through her, all reformers who worked and work for the benefit of Ukraine," according to a statement published on September 17. "This is no longer a series of incidents, it is terror. Its purpose is to intimidate reformers, past and present, and to paralyse our activities, to silence us."
The NBU tweeted a similar statement out on its official Twitter account along with a black image embossed with the words “STOP TERROR” to drive the point home.
The NBU's board said it "will not be silent,” adding that, "This is a direct and undisguised threat to democracy and the reforms that Ukraine’s future and the wellbeing of its people depend on," the statement reads. "But it is not just a threat to the reforms. It is a threat to every citizen, and their constitutional rights and freedoms, which the state has committed to protect."
On September 17, Gontareva's family's house near Kyiv in which she and her family resided in 2014-2018, was burned down a result of an arson attack. The Ukrainian police opened criminal proceedings over intentional destruction or damage to property. Normally Central Banks are attacked by FX speculators, not Molotov cocktails.
The attacks against Gontareva and her family and interests have been rapidly escalating. Ukraine's law enforcers raided Gontareva apartment in Kyiv, although she said she has not lived there for more than a year, after she fled to London. The raid followed two incidents with Gontareva and her family -
a car belonging to her daughter-in-law was doused in petrol and burned in front of her house in downtown Kyiv. A week earlier, the former governor of the central bank was hit by a car in London, which led to her hospitalisation with serious injuries.
"[The attacks on Gontareva] threaten the complete destruction of the moral values of a democratic society in favour of terror," the NBU added. "We call for action. Law enforcement authorities must promptly and impartially investigate this series of attacks, as well as offenses against the owners and shareholders of insolvent banks of which the NBU has previously informed these authorities."
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