Page 92 - RUSRptApr17

“Greater foreign exchange liquidity as oil prices regain some ground and net capital outflows dwindle have convinced us to restore Russia’s medium-term sovereign risk rating to minimum investment grade from the top of the speculative range,” said Charles Movit, senior manager, CIS and Europe at IHS Markit. “Russia can expect some modest growth to resume over 2017. Moderate further gains in oil prices and the return to economic expansion, albeit at much more moderate pace than seen prior to the global recession, will continue to support the sustainability of the country's private-sector external debt. These developments will also ease the fiscal situation, preserving the country's very modest public-sector debt to gross domestic product (GDP) ratio.”
IHS Markit highlighted the Central Bank of Russia (CBR) decision to free float the ruble early as oil prices tumbled at the end of 2014 as the decisive decision that has cushioned the economy from the heaviest blows and allowed the regulator to preserve the country’s hard currency reserves, which currently stand at just under $400bn or about 24 months of import cover.
“Russia was swift to let the ruble fall and raise interest rates in the face of lower oil prices. The budget was also revisited to retrench capital outlays and limit the widening of the fiscal deficit, factoring into our upgrade of Russia’s debt,” added Jan Randolph, director of Sovereign Risk at IHS Markit. Unlike others, such as Nigeria and the smaller African and CIS energy producers whose policy road maps out of trouble have been slower and less clear, Russia, like Brazil, has had the advantage of being here before in the face of commodity crashes and knew what to do; painful and politically difficult though these policy response measures often are.”
8.4.1 International ratings - specific details of rating actions corp/regional etc
Moody's Investors Service upgraded the corporate family rating of Russian oil company RussNeft to B1 from B2 , while changing the outlook from Stable to Positive, the agency said on April 25. "Our decision to upgrade RussNeft's ratings reflects continued efforts by the company's shareholders and management to reduce leverage and financing costs and extend its debt maturity profile,” the press-release cites Moody's Vice President Denis Perevezentsev. The agency also notes the improvement of RussNeft’s operating profile and the reversal of the falling production trend since the second half of 2016.
8.5 Fixed income
Foreign investors lured by some of the highest interest rates in the global capital markets poured a record record amounts into Russia’s local-currency debt in March.
In March non-residents bought around RUB85bn of OFZ (in net terms) compared to RUB15bn and RUB47bn in February and January respectively.
Such amounts are in line with the recently published Balance of Payments
92 RUSSIA Country Report April 2017 www.intellinews.com