Independnce Day of India

Posts Tagged: credit rating

 

The Standard & Poor’s rating agency has put Greece on credit watch, citing the policies of the country’s new government as the possible trigger of a future credit rating downgrade.

 “The CreditWatch placement reflects our view that some of the economic and budgetary policies advocated by the newly elected Greek government, led by the left-wing Syriza party, are incompatible with the policy framework agreed between the previous government and official creditors,” S&P said in a press release Wednesday.

S&P warned that “if the new Greek government fails to agree with official creditors on further financial support, this would further weaken Greece’s creditworthiness” and would prompt the agency to lower the country’s B/B sovereign debt ratings.

In 2009, S&P came under fire for downgrading Greece’s credit rating, in a move that contributed to the country’s economic meltdown. Greece was the first Eurozone country to have its debt rating slashed to junk, despite protests from Brussels. >> Read More

 

Russian President Vladimir Putin’s spokesman said on Tuesday that decisions taken by credit rating agencies were politically motivated, after U.S. agency S&P downgraded Russia’s sovereign credit rating to below investment grade.

“They [ratings decisions] are politically motivated, and consequently it’s unlikely that wise companies can and should take them into account,” spokesman Dmitry Peskov said.

However, First Deputy Central Bank Governor Ksenia Yudayeva said the S&P decision was largely expected, the RIA Novosti news agency reported.

“We believe that, to a large extent, this was expected,” Yudayeva said. “In general, it was already taken into account in many decisions.”

 

On the heels of last week’s downgrades by Fitch and Moody’s to just above junk status, The Central Bank of Russia (CBR) has issued a statement that it will no longer use credit ratings from Standard & Poor’s, Fitch, or Moody’s that were assigned after March 1, 2014. All credit ratings will now be at the discretion of the Board of Directors of the Bank as regulators assess whether or not the ratings made after March are accurate. Sounds like Spain, Greece, and USA’s previous derision over ratings agencies proclamations is heading east.

As RT reports,

The Central Bank of Russia will no longer use credit ratings from Standard & Poor’s, Fitch, or Moody’s that were assigned after March 1, 2014.

 

All credit ratings given to Russian companies and banks will now be at the discretion of the Board of Directors of the Bank, according to a press statement Monday. The regulator will assess whether or not the ratings made after March are accurate.

 

The decision comes after Fitch and Moody’s downgraded Russian sovereign debt to just above junk status. Standard & Poor’s will decide whether it cuts Russian debt to junk level by the end of January after cutting it last April, after Crimea rejoined Russia and the West began to levy sanctions against Moscow.

>> Read More

 

Ratings agency Standard and Poor’s said on Friday that it planned to complete a review of Russia’s sovereign credit rating by the end of January, after earlier saying it expected to make a decision by mid-January.

S&P currently rates Russia’s sovereign debt one notch above ‘junk’ status, and Russian markets have been jittery over the prospect of a downgrade.

A downgrade would mark the first time in more than 10 years that Russian sovereign debt has been rated below investment grade.

 

Russian officials and experts warned Wednesday that an expected decision by Standard and Poor’s to deprive Russia of its investment-grade credit rating could cost the country up to $30 billion and drain more money from an economy that is already entering recession.

Major credit rating agencies Fitch and Standard and Poor’s currently rank Russia one notch above junk.

Standard and Poor’s placed Russia on negative credit watch last month and said the country’s status would be re-evaluated in mid-January.

A downgrade to junk would mark Russia’s return to the investment grade it held until 2004 and could trigger a sell-off by conservative investment funds barred from buying sub-investment grade securities. Analysts also warned the move could spook equity and bond traders.

“It’s not worth underestimating the indirect effects on the market,” said Konstantin Artyomov, a money manger at Raiffeisen Capital in Moscow, in written comments Wednesday. >> Read More

 

The main reasons behind Russia’s credit ratings downgrade are the drop of oil prices and increased military spending, Sean Egan, the founder of Egan-Jones Ratings Company, told Sputnik on Wednesday.

 Last week, rating agency Fitch downgraded Russia’s credit rating from BBB to BBB- with a negative outlook, citing the fall in oil prices and the depreciating ruble.

“There are two major concerns. One is the halving of petroleum prices over the past six months. And two is the costs of Russia’s military actions,” Egan said.

He stressed that, although military expenditure has grown in Russia, it was secondary to the dramatic drop of oil prices in recent months. He also elaborated on the consequences for Moscow in the short, medium and long term. >> Read More

 

Moody’s Investors Service has today downgraded Venezuela’s government bond ratings to Caa3 from Caa1 and changed the outlook to stable from negative. 

The key drivers of today’s rating actions are the following: 

1) Default risk has increased substantially as external finances continue to deteriorate due to a strong decline in oil prices. 

2) In the event of a default, Moody’s believes that the loss given default (LGD) is likely to be greater than 50%. 

The stable outlook is based on Moody’s view that even if the oil price drops further, expected losses to bondholders are likely to be consistent with a Caa3 rating and unlikely to reach levels associated with lower ratings.

 The sovereign’s senior unsecured and senior secured ratings have also been downgraded to Caa3 from Caa1, as well as the senior unsecured medium term note program and the senior unsecured program to (P)Caa3 from (P)Caa1. 

Venezuela’s long-term local-currency country risk ceilings were also adjusted to Caa2 from Caa1, the foreign currency bond ceiling to Caa3 from Caa1, and the foreign-currency bank deposit ceilings to Ca from Caa2. The short-term foreign currency bond and deposit ceilings remain at NP. These ceilings reflect a range of undiversifiable risks to which issuers in any jurisdiction are exposed, including economic, legal and political risks. These ceilings act as a cap on ratings that can be assigned to the foreign and local-currency obligations of entities domiciled in the country.  >> Read More

 

Moody’s has warned that the chances of Ukraine defaulting on its international debt is “exceedingly high” even if Russia does not call for early repayment of its $3bn loan to Kiev this year.

In an update on its views on Ukraine – and not a formal rating decision – Moody’s pointed out that Ukraine’s current bailout package from the International Monetary Fund, EU and other international lenders is insufficient to cover the $10bn of external debt repayments due this year.

Moreover, local banks and Naftogaz, the state-guaranteed gas company, will also need recapitalisation and external funding. The central bank is down to about $9bn of reserves, which only covers a few weeks of imports, and the IMF itself estimates Ukraine needs another $15bn on top of the existing programme to stave off a crisis.

Moody’s said that “as a consequence, the risk of default by the sovereign or another Ukrainian issuer is exceedingly high”. This despite reckoning that Russia will not ask for early repayment of a $3bn bond that can be called when Ukraine’s debt-to-GDP ratio goes above 60 per cent – as is likely when final economic data is out this spring. >> Read More

 

The currency turmoil that has rocked the Russian rouble in recent weeks is over, according to the country’s finance minister.

A number of interventions in the foreign exchange markets by the government and state-controlled exporters have helped to stem the capital flight from Russia, and Anton Siluanov said its central bank could move to lower interest rates if the stability persisted.

The rouble strengthened by as much as 4.5pc against the dollar to 51.43 roubles on Thursday as exporters sold foreign currency in response to government pressure and to meet tax payments. It also gained as much as 2.9pc against the euro to 63.59 roubles.

Russia’s currency has trimmed its losses against the greenback to around 37pc this year. Two weeks ago, a dollar would have purchased 79 roubles.

>> Read More

 

Russia’s credit rating may be cut to junk after rating agency Standard & Poor’s warned of the toll a weakening economy is having on the country’s financial system.

The country currently has a BBB-rating, the lowest rung of the investment grade universe.

In a short statement on Tuesday, S&P said:

We are reviewing our assessment of Russia’s monetary flexibility and the impact of the weakening economy on its financial system.

As a result, we are placing our long-term sovereign credit ratings on Russia on CreditWatch with negative implications.

That designation brings with it a higher chance of a downgrade.

Russia hung onto its investment grade status at S&P’s last review in October, but since then a further decline in the oil price and a crumbling rouble has dented Russia’s economic performance.

Russian banks and companies are due to repay $119bn in 2015, according to official data. A downgrade would raise the cost of refinancing for these companies.

S&P said it will make a decision on the rating by the middle of next month.

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