S&P Says Russia Rating Still Negative
World Economy

S&P Says Russia Rating Still Negative

Standard & Poor’s Ratings Services said it affirmed its ‘BBB-/A-3’ long-and short-term foreign currency sovereign credit ratings and its ‘BBB/A-2’ long-and short-term local currency sovereign credit ratings on Russia.
The outlook remains negative, S&P said in its statement, adding that it also affirmed the long-term national scale rating on Russia at ‘ruAAA’, Itar Tass reported Saturday.
“The ratings are supported by the economy’s net external asset position and the Russian government’s modest net debtor position, which we expect to be maintained in 2014-2017,” the ratings agency said.
It said that in line with its forecast, the economy will “expand by 1% annually in 2014-2017, similar to the previous five years.”
“This muted growth is partly a legacy of the structural economic slowdown that was already taking place before the Ukraine crisis. It also reflects a lack of external financing and lower oil prices,” the agency said.
“We also estimate real GDP per capita growth to average about 1% over 2014-2017, weighted according to our criteria. Ruble depreciation will subdue GDP per capita, which we forecast at $13,400 in 2014,” S&P said.
“Although we view Russian corporates and banks rated by Standard & Poor’s as having sufficient foreign currency to meet their funding needs through to end-2015, we believe that less-financially-robust entities outside the rated universe are likely to experience deteriorating financial profiles,” it said.

“We expect the central bank will provide sufficient liquidity support to the economy,” the statement said.
“The negative outlook reflects our view that we could lower our ratings on Russia over the next 18 months if its external and fiscal buffers deteriorate faster than we currently expect - for example, due to any further tightening of sanctions as a result of the conflict in Ukraine,” it said.
“We could revise the outlook to stable if Russia’s investment climate and economic growth prospects were to improve,” S&P said.
Meanwhile, Russian presidential economic aide Andrei Belousov said earlier Friday that Standard & Poor’s is unlikely to downgrade Russia’s sovereign rating to a speculative level because this action will undermine the agency’s reputation.
Finance Minister Anton Siluanov said on Friday fears over a possible downgrade of Russia’s sovereign rating by international rating agency Standard & Poor’s were exaggerated.

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