S & P has sent Russia’s rating on review for a “negative” outlook – RBC

S & P has sent Russia's rating on review for a "negative" outlook – RBC

The international rating agency Standart & amp; Poors sent for review sovereign credit rating of Russia with a “negative” outlook.

«We are revising our assessment of the flexibility of monetary policy in Russia and the impact of economic weakness on its financial system” – the report says the agency.

His decision S & amp; P explained including “sharp decline” the flexibility of monetary policy.

The final results of the S & amp; P announced in mid-January. «S & amp; P with a probability of 50% will lower the rating in the next 90 days,” – the report says.

On December 23 at around «BBB- / A-3″ are long-term and short-term sovereign ratings in foreign currency and at the level «BBB / A-2 ‘- in the national currency.

October 24 S & amp; P confirmed Russia’s sovereign rating on borrowings in foreign currency at BBB- (one notch above” junk “) and c «negative” outlook.

Then, the agency stated that the rating affirmation reflects the strong position of foreign assets and moderate indebtedness of the state. In the autumn of S & amp; P predicted that this trend will continue in the 2014-2017 years.

However, in October, the agency warned that if Russia will experience a decrease in the flexibility of monetary policy and the exchange rate, the sovereign rating could be downgraded . As noted then in the S & amp; P, the ratings are limited structural weakness of the Russian economy. Including analysts noted the high dependence on Russian hydrocarbons and raw materials sector. According to experts of the agency, relatively weak political and economic institutions in the country hinder the development of the economy and favorable investment climate.

Before the action S & amp; P 20 October Russia’s rating agency downgraded Moody’s – to Baa2, while maintaining a “negative” outlook. Then the analysts explained their decision by saying that there was a deterioration of medium-term prospects for the Russian economy. This is exacerbated by the persistence of the crisis in Ukraine and the negative impact of sanctions, explained earlier in Moody’s.

Chief Economist Bank of America Merrill Lynch Vladimir Osakovski called the event expected for the market. “This can be seen by the level at which traded Russian Eurobonds. They actually have equated to “junk” securities “, – he said.

According to the economist, if the rating of Russia will still be reduced, it will cause significant damage to its economy. “We see this risk as one of the major next year. If the rating is lowered, it will begin mass sale of Russian assets, “- said Osakovski, adding that the ruble news about the revision of the rating is unlikely to have a significant impact, although it is possible that in the short term, the Russian currency may weaken a bit.

Reducing Russia’s sovereign rating in foreign currency to BBB- (c BBB) occurred in late April. This rating is on par with countries such as Brazil, India, Azerbaijan, Iceland, Spain. These actions reflected the concerns of analysts regarding the continuation of financial outflows from Russia – after a significant figure in the first quarter of 2014 ($ 51 billion). At the same time the agency drew attention to the slowdown in economic growth in Russia to 1.3% (the lowest level since 1999).

Then in the release S & amp; P also identified and political factors – weak institutions and conservation a high degree of centralization of power.