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Russia Sees Investment Grade Rating This Year

Russia sees its sovereign credit rating investment grade rating returning this year due to rising oil prices on the international market and a recovering economy. Moody’s boosted its outlook on the country to Stable on Friday (Bloomberg), reports Seeking Alpha.

“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,” Moody’s wrote. “In addition, the Russian economy is now recovering after a nearly two-year-long recession. Moody’s believes that, when combined, those two factors have eased the downside risks the rating agency had identified last year when it assigned the negative outlook.”

Moody’s also noted “the economy’s sheer scale and wealth as well as its healthy fiscal and external positions,” but contrasted that with, “Russia’s high susceptibility to geopolitical risk, with associated spillover to volatility in the real economy and financial markets, and relatively weak institutions.”

A lot will ride on future negotiations with the Trump administration and on whether or not Russia can obtain the easing of economic sanctions imposed after the Russian annexation of the Crimean Peninsula. World powers also met at the Munich Security Conference to discuss the situation in East Ukraine which has also drawn sanctions on Russia from the West.

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