Moody’s upgrades Russia’s rating to Baa3, outlook Stable

WASHINGTON/MOSCOW, Feb 11 (PRIME) -- International rating agency Moody’s has upgraded Russia’s sovereign rating to the investment grade of Baa3 from the junk rating of Ba1 with a Stable outlook, the last of the top three international agencies to upgrade Russia to the investment grade, the agency said in a statement on February 9.

The upgrade reflects a positive impact of government measures aimed at strengthening Russia’s finances and decreasing vulnerability to external pressure, including sanctions, the agency said, adding that the return of the investment grade was delayed due to the country’s dependency on oil prices and over geopolitical tensions.

The chances that Washington will introduce new sanctions against Russia are high, and the sanctions are likely to include a ban for American individuals and companies to buy and own sovereign bonds.

Still, the new possible sanctions are unlikely to have an impact on Russia’s rating, as the country is capable of coping with even tougher-than-expected sanctions or other external shocks like falling oil prices. The room for a budget maneuver that the government had created and the protective measures it introduced create the possibility to react without hurting the country’s credit portfolio, the agency said.

Russia is fully capable of satisfying its borrowing plans with domestic debt, the agency added.

Russian Finance Minister Anton Siluanov said that the long-awaited decision means that success of the government’s economic policy was duly appreciated. “This fair decision, albeit belated, was based on high quality of the macroeconomic, budget, and monetary policies conducted by the Russian authorities,” he said.

Economic Development Minister Maxim Oreshkin said that the agency has run out of arguments against raising the rating.

“They have been holding their ground for a very long time. But, obviously, they have exhausted their supply of arguments against it, even the most fantastic ones,” he said.

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