Page 78 - RusRPTJul19

Moody’s rates Russia at Baa3 with stable outlook on both its foreign and local currency debt.
Moody’s last upgraded Russia from Ba1 (Positive) in January 2018 as the economy started to emerge from several years of recession. The lowest rating the country had was B3 in August 2008 following the collapse of the ruble that year and technical default on the GKO state treasury bills. The highest the country has scored was Baa1 in March 2013 as economy bounced back from the 2008 crisis.
Fitch rates Ukraine at BBB- on both its foreign and local currency debt with no outlook indicated.
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
Russia’s Ministry of Finance has placed a record number of ruble- denominated OFZ treasury bills in the second quarter of this year bring the total outstanding to RUB8 trillion ($126.8bn) as foreign investors increase their share again to 27.8% of the total outstanding, Vedomosti reported on June 27.
The second quarter has been extremely successful for the Ministry of Finance. At the latest auction on June 26 the ministry placed RUB18.4bn of OFZ bonds, the workhorse bond used to finance the government’s spending, to bring the total for the quarter to RUB888bn – a record amount for placements in one quarter, the ministry said. Taking into account redemptions this year, the ministry has already borrowed RUB950bn, or 70% more than for the whole 2018, while the total volume of bonds issued since January is RUB1.4 trillion.
The enthusiasm for Russian domestic issued paper has seen a dramatic turnaround. Last year’s sanctions fears saw a dramatic sell off with foreign investors dumping some RUB500bn of OFZ bonds and reducing their share from a record 34% set in April to around 25% by the end of the year. However, as this year got underway and it became clear the US Federal Reserve bank would not only halt its monetary tightening policy, but may even reverse it, enthusiasm for the high yielding Russian bonds returned. After a slight wobble in March, the share and volume of bonds foreigners have been buying as risen quickly.
78 RUSSIA Country Report July 2019 www.intellinews.com