Fitch upgrades Russia’s rating to BBB from BBB-, outlook Stable

MOSCOW, Aug 12 (PRIME) -- International rating agency Fitch has upgraded Russia’s long-term issuer default ratings in local and foreign currencies to BBB from BBB- with a Stable outlook, the agency said in a statement late on August 9.

“Russia has entrenched a credible and consistent policy framework that will deliver improved macroeconomic stability, reduce the impact of oil price volatility on the economy, and support increased resilience to external shocks,” the statement read.

Russia’s “strengthened policy mix” will help it cope with the sanctions’ risk, and a flexible exchange rate, a strong commitment to inflation targeting, a sensible fiscal strategy, and strong fiscal and external balance sheets will ensure that, the agency said.

“Fitch believes that Russia’s twin surpluses, low government debt, fiscal assets and large foreign exchange reserves means that it would be able to withstand sanctions, for example keeping foreign investors from holding and transacting in new sovereign debt, although it would add to the cost of financing,” Fitch said.

The U.S. is unlikely to impose sanctions that would prohibit Russia from servicing sovereign debt or Russian banks from conducting U.S. dollar operations, the agency added.

“However, the continued threat of sanctions’ escalation will weigh on Russia’s external financing flexibility, investment and growth prospects,” it said.

Russian Finance Minister Anton Siluanov told reporters that the upgrade is another confirmation that the Russian economy has adapted to external challenges. “It is good news that the high quality of the country’s macroeconomic, budget, and monetary policies allowed us to return the country’s rating to that level,” he said.

“We welcome the decision of Fitch Ratings to raise long-term credit rating of Russia to the next ‘investment’ grade of BBB with a stable outlook. In fact, the agency has returned to its own estimate of the country’s risk as of 2014, before the rating was reduced due to introduction of external restrictions against Russia.”

Moscow expects the two other largest international rating agencies – Moody’s and Standard & Poor’s – to follow Fitch in upgrading Russia’ ratings, he added.

Kirill Dmitriev, CEO of the Russian Direct Investment Fund, said that the upgrade of Fitch reflects good condition of the key elements of macroeconomic policy, while fast economic growth would raise investment attractiveness of Russia.

“In spite of all external risks, the upgrade again reflects the quality of economic policy and Fitch’s belief in the stability of the Russian economy,” he said.

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