RUB: S&P and Fitch rating review in focus - TDS

Analysts at TDS point out that today S&P and Fitch are due to review their sovereign rates for Russia.

Key Quotes

“S&P has an FC rating of BB+ (positive), essentially the same as Moody’s, while Fitch is one notch higher at BBB- (positive). S&P moved its outlook to positive in March of last year, citing the ability of the economy to adapt to a low oil price environment, a pick-up in economic growth, and a lower risk of large capital outflows. At the September review S&P said that the rating may be raised if “the recovery in economic growth continues”. We think that the pick-up in global oil prices since September and continuing, albeit modest, growth means that S&P will probably raise its rating to BBB- with a stable outlook.”

“Fitch raised its outlook to positive in September of last year, saying that “Russia continues to make progress in strengthening its policy framework underpinned by a more flexible exchange rate, strong commitment to inflation targeting and a prudent fiscal strategy, reflected in the recently approved budget rule”. We think that Fitch is less likely than S&P to raise its rating today given that it is already higher than the other two agencies and that they only raised the outlook to positive back in September.”