13 May 2004 18:59
S&P HOPES TO SEE FASTER REFORMS IN RUSSIA
WASHINGTON/MOSCOW. May 13 (Interfax) - Standard & Poor's thinks it is highly likely that Russia's
sovereign rating will be raised to an investment grade, but would like to see more from the government in the
implementation of structural reforms before then, credit analyst Helena Hessel told Interfax.
AAA, AA, A and BBB are investment grade ratings on the S&P scale,
while BB, B, CCC, CC and C are considered to have considerable
Russia's long-term rating from S&P is currently at BB+ with a stable outlook, one notch short of investment
grade.
speculative characteristics.
So far only Moody's has assigned an investment grade rating to Russia. Russian analysts previously predicted
that the other leading agencies might upgrade Russia to investment grade after the presidential elections in March
2004.
Upgrading Russia's sovereign to investment grade is a more serious step than moving from BB-to BB, as in
December 2002, and then to BB+ in January 2004, because it will be a kind of milestone in the country's
development, Hessel said.
When a country as dynamic as Russia has a sovereign rating of BB+,
there is a high likelihood that it will be upgraded, said Hessel,
There are various structural reforms that have yet to be implemented and that S&P would like to see before it
makes that step, she said. The rating agency would like to see much more diversification in the economy, so that it
would be less dependent on oil and gas, and we would like to see a more developed institutional environment, as it
currently remains weak with unpredictable regulation, she said.
A stable outlook is generally an indicator that a rating is not
going to be changed in the near future, but S&P did raise Russia's BB
Administrative reform in Russia is only just beginning, Hessel said.
However, Russia's long-term rating does have the potential for an upgrade, despite its stable outlook.
refusing to add when such an upgrade might take place.
rating with a stable outlook to BB+, she said.
The Yukos affair will not affect the agency's decision on Russia's sovereign rating, she said, adding that
the situation surrounding the oil major could be a reflection of the insufficient development of Russia's judicial
institutes.
Hessel praised the government's initiative to raise the tax burden on the oil industry. The decision to raise
oil company taxes was taken at a good time when the industry is flourishing, she said.
[Interfax] |
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