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. Last Updated: 07/27/2016

Downgrade Considered By Moody's




The international rating agency Moody's is reviewing for possible downgrade Russia's country rating on foreign currency bonds and notes and its country ceiling on foreign currency bank deposits, it said in a statement Tuesday.


As a consequence, it said it is also reviewing the ratings of a string of Russian public sector and corporate bonds and nine Russian banks.


The forthcoming Moscow City Telephone Network, Moscow City and LUKoil Eurobonds are included on the list of bonds to be reviewed.


Banks under review are: Alfa Bank, Aljba Alliance Commercial Bank, Avtobank, Bank Menatep, National Reserve Bank, Rossisky Kredit Bank, SBS-Agro Bank, Uneximbank and Vneshtorgbank.


Russia's rating for long-term liabilities in foreign currency is Ba2, while its long-term bank deposits rating is Ba3.


The dramatic increase in treasury-bill yields hampers the servicing of the national debt, the statement said.


The ruble is coming under increasing pressure, the Central Bank's foreign exchange reserves are shrinking and short-term borrowing by Russian banks on international financial markets is increasing, Moody's said.


"Sub-national government units and corporates are queuing to borrow internationally, adding to financial uncertainties," the statement said.


Underlying these concerns Moody's says there are "long-standing questions concerning the willingness and ability of the federal government to chart a consistent direction and to function effectively in the field of fiscal policy."


In light of the situation, Moody's plans to study how capable the Russian government is of "implementing a comprehensive set of policies" tackling the emerging problems.


A Moody's spokesman said it expected to complete the bank review after April or May, and the sovereign review before that.