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Russia’s rating cut to have little impact on companies — Central Bank official

January 27, 2015, 18:31 UTC+3 MOSCOW
Last time Russia was rated that low was eleven years ago, in January 2004
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Russian Central Bank

Russian Central Bank

© TASS/Pavel Smertin

MOSCOW, January 27. /TASS/. A decision by international rating agency S&P to cut Russia’s sovereign credit rating to the speculative grade was expected and will have little impact on Russian companies’ access to capital markets, Central Bank First Deputy Chief Kseniya Yudayeva said on Tuesday.

Standard & Poor's lowered Russia’s sovereign credit rating on January 26 to the speculative grade BB+ from the investment level BBB-, with a negative outlook.

Last time Russia was rated that low was eleven years ago, in January 2004, when S&P downgraded Russia to "BB+."

"This was an expected event and it was taken into account in many developments. As for the access of companies to markets, this decision will hardly have any strong impact because many companies were already barred from these markets," the Central Bank first deputy head said.

Western sectoral sanctions imposed against Russia bar major Russian companies and banks from raising medium-and long-term financing on international capital markets.

After the rating cut, S&P said the downgrade reflected its view that Russia's monetary policy flexibility had become more limited and its economic growth prospects had weakened.

Meanwhile, Russia’s Finance Minister Anton Siluanov said late on Monday that S&P’s decision to downgrade Russia to the speculative grade demonstrated exorbitant pessimism and ignored strong points of the Russian economy.

"This decision demonstrates the agency’s exorbitant pessimism. It ignores a range of factors that characterize strong points of the Russian economy," he told journalists, adding that such strong pints included vast international reserves, such as sovereign funds, current account surplus and low public debt.

"These are Russia’s undoubted advantages in the current macroeconomic conditions," he said.

He added that his ministry saw "no grounds to dramatize the situation."

"There are no grounds for foreign investors’ withdrawing from Russian assets since such actions can be justified by the loss of investment rating from at least two agencies," he said, adding that there were no grounds either to expect creditors demand early repayment of debts by Russian borrowers. This risk, in his words, is overestimated.

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