Credit Rating of Russia

Russia Bemoans Low Credit Rating as Government Seeks to Increase Borrowing

http://www.bloomberg.com/news/2011-08-08/russia-bemoans-low-credit-rating-as-government-seeks-to-increase-borrowing.html

Article:

By Scott Rose - Aug 8, 2011 11:31 AM ET

Russia is “clearly underrated” by credit rating companies because its debt relative to the economy’s size is below the level in most developed and emerging nations, the Finance Ministry said.

Russia, rated BBB at Standard & Poor’s, the second-lowest investment grade, has a debt-to-GDP of 9.3 percent, the ministry said today in a report on its website. That compares with 42.7 percent for similarly rated Mexico, it said.

The ratio will rise to 17 percent by the end of 2014 as Russia seeks to borrow more than 2 trillion rubles ($70 billion) a year to finance budget shortfalls, according to the report. Boosting the rating to “A” level is a government priority, the ministry said. The country’s low rating is an “outrage,” Prime Minister Vladimir Putin said July 13.

“Low levels of state debt favorably set Russia apart from the vast majority of developed and developing countries,” the ministry said in the report, which outlines its debt strategy through 2014. Russia’s rating at all three major agencies “shows that our country is clearly underrated.”

The nation’s sovereign credit rating was last raised by Moody’s Investors Service in 2008 to Baa1, the third-lowest investment grade, one step above Brazil and four below China.

Ruble Debt

Ruble-denominated government debt lost 2.6 percent in dollar terms last week, JPMorgan Chase & Co. indexes show. The benchmark 2018 ruble Eurobond yielded 7.054 percent today, the highest since April 18, according to data compiled by Bloomberg.

Investors are fleeing riskier assets as policy makers in the U.S. and Europe grapple with sovereign debt crises amid signs of slowing economic growth. The European Central Bank returned to bond markets as a slump in Italian and...