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. Last Updated: 07/27/2016

Fitch Questions Russian Debt Management Strategy

LONDON - Russia is "displaying a worrying lack of co-ordination" in its medium term debt strategy, highlighted by its dealings with the Paris Club of sovereign creditors, rating agency Fitch said Thursday.

Even so, the agency did not change its ratings for the country -- currently "B" for long term foreign currency debt.

"Russia's spectacular macroeconomic performance last year led to a massive improvement in its near-term capacity to pay its debts," Fitch said in a statement.

The agency said worries about Russia's willingness to pay persist. Russia said in January it would not make payments on debt owed to the Paris Club, but swiftly reversed the decision and has now paid what it owes for this quarter.

But the episode "provides further evidence that Russia tends to regard debts that fall due as a matter for negotiation rather than contractual obligation", Fitch said.

It said Russia's debt strategy could hamper plans to return to the international capital markets this year. Russia has $1 billion of Eurobond debt maturing at the end of November 2001, which it would like to refinance.

Fitch said Russia's debt stategy would be enhanced if it could successfully complete the restructuring of Soviet-era debt, then establish a full servicing record for "Russian" Eurobonds issued since 1997.