09 October 2003 01:53
Russia: new credit rating
How soon they forget. Last time Russia came within spitting distance of an investment grade credit rating was 1997, but a year later it defaulted on its debt. Five years on, and the country has finally reached the promised land, with a two-notch upgrade from Moody's to Baa3. Russia's economic recovery since 1998 has been remarkable. Tax reform has produced a budget surplus. The government has taken advantage of high oil and commodity prices to pay down debt. Without the black mark of the 1998 default, Russia would long ago have moved to investment grade on the standard rating models. Other agencies are unlikely to follow Moody's, arguing that the economy remains too vulnerable to a fall in oil prices. But with Russia's oil and gas industry endorsed by BP, and possibly soon ExxonMobil, a price fall is not going to bring investment to a halt. For all that, there are enough factors reminiscent of 1997 to give investors pause for thought. Investment banks are busily reopening the Moscow offices they closed five years ago. Moscow hotel rooms and same-day air tickets to London, according to Renaissance Capital, are as hard to obtain as they were in those heady days. The equity market, up 63 per cent in the last six months, is expensive, and largely driven by a belief in further inflows of capital. Numbers of wealthy Russians, however, are selling out. Default may not be a threat this time but a sharp correction in the stock market is distinctly possible.
Russian President Vladimir Putin has voiced satisfaction over the rating agency Moody's increasing Russia's rating by two points
Rating bolsters Russia
Russia: new credit rating
Upgrade puts Russia on investment map
Moody"s upgrades Russian debt to investment grade
Russian upgrade sparks euphoria
Investment grade for Russia is big boost for Putin
Moody`s upgrades Russia`s from Ba2 to Baa3 (revised)
Moody`s upgrades Russia`s from Ba2 to Baa3 (in detail)
[FTI [The Financial Times]] |
RUSSIA IN FACTS
