Moody’s changes outlook on Russia’s government bond to stable

MOSCOW, Feb 20 (PRIME) -- International rating agency Moody’s has changed the outlook on Russia’s Ba1 government bond rating to stable from negative, the agency said late on February 17.

Moody’s also affirmed Russia’s government bond rating and issuer rating at Ba1 and the short term rating at Not Prime (NP).

“The main driver for changing the outlook on Russia’s Ba1 government bond rating to stable from negative is the government’s enactment of a medium-term fiscal consolidation strategy that is expected both to lower the government’s dependence on oil and gas revenues and to permit the gradual replenishment of its savings buffers. In addition, the Russian economy is now recovering after a nearly two-year-long recession,” the agency said.

Moody’s assigned a negative outlook for Russia’s Ba1 government bond rating in April 2016, citing a lack of a comprehensive strategy to address the expected depletion of the Russian government’s fiscal savings.

“While there has indeed been some erosion of buffers in the meantime and the government's fiscal performance has fallen short of its own expectations, Moody's now believes that the downside risks identified in April 2016 have diminished to a level consistent with a stable outlook,” the agency now said.

Russian Finance Minister Anton Siluanov said that Moody’s decision to improve the rating outlook had become possible thanks to the government’s actions to reduce the economy’s dependence on oil and gas revenues and replenishment of sovereign funds.

Economic Development Minister Maxim Oreshkin said the decision was expected and reflects real improvements in the economy.

The Russian Direct Investment Fund’s (RDIF) Director Kirill Dmitriev said Moody’s decision was positive, but the agency underestimates positive trends in the Russian economy.

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