Fitch Ratings affirms Russia at BBB with stable outlook

PanARMENIAN.Net - Fitch Ratings has affirmed Russia’s long-term foreign and local currency Issuer Default Ratings (IDR) at ‘BBB’ with a stable outlook.

Fitch also affirmed the country’s short-term rating at ‘F3’ and the country ceiling at ‘BBB+’, the agency said in a statement Wednesday, Aug 14, according to RIA Novosti.

One of the reasons for the affirmation is that Russia has strong sovereign and external balance sheets.

“General government debt ended 2012 at just 10.4 percent of GDP, the lowest ratio in the 'BBB' category, while sovereign net foreign assets were 24 percent of GDP,” Fitch said.

“The Central Bank of Russia's (CBR) international reserves exceed USD500bn (24 percent of GDP). Sovereign wealth funds (the Reserve Fund and the National Wealth Fund) held USD171bn (8.5 percent of GDP) in June, providing a buffer against external shocks,” it said.

Although inflation exceeds the upper limit of 6 percent set out by the Central Bank, largely on non-monetary factors, it is now lowering toward the target, the agency said.

“The CBR has prioritized lowering inflation over stimulating growth, and while Russia's track record on inflation is weaker than peers, it is improving. The CBR has minimized intervention in the ruble and is allowing a freer float, allowing the exchange rate to absorb external shocks, which Fitch views positively,” it said.