Page 81 - RusRPTDec18

8.4 International ratings
Moody's may raise Russia's sovereign rating in 2019. A Moody’s senior VP announced at a conference yesterday that the rating agency may raise Russia's sovereign rating from Ba1 to investment grade next year. If it does, Russia will no longer have a junk rating at any of the big three credit agencies. An increase in Moody's sovereign rating from junk to investment grade would be a really helpful signal boost given the dearth of FDI coming into Russia since 2014. Undoubtedly, it would help some investors on the margins with less country-specific interest make decisions. However, it would still have to be checked against Fitch's ratings and S&P. All three have generally "positive" outlooks, to the extent that's possible given the sanctions climate. But Russia won't be able to use good macro figures to attract that much more investment. Also, sanctions aside, Russian resource exporters may soon be hit with external market shocks. This isn't in the bank, but expect to see the Moscow Exchange and others flag an increase in Russia's sovereign rating as a positive indicator.
● The Moody’s executive said that, in order to raise Russia’s rating, there must be no negative “surprises” from sanctions, geopolitics, or domestic market developments.
● She cited the main risks as a decline in banks' creditworthiness due to new sanctions or further restrictions in Russia’s access to international capital markets.
● Moody’s is currently the only of the big three (Moody’s, S&P, and Fitch) that maintains Russia’s rating at the speculative (“junk”) level of Ba1.
● In February 2018, S&P raised Russia's sovereign credit rating to BBB- after a downgrade to speculative in January 2015. Fitch has maintained Russia at the BBB- level.
81 RUSSIA Country Report December 2018 www.intellinews.com