Moody’s says Russian economy resilient to latest US sanctions

Russia launches WTO challenge against US steel, aluminium tariffs

NEW YORK, April 19, (Agencies): Rating agency Moody’s Investors Service said on Wednesday Russia’s strong public and external finances would shield its economy from the impact of the latest US sanctions.

However, the sanctions will be credit negative for some Russian debt issuers, especially Russian aluminum giant United Company Rusal Plc, Moody’s said http://bit. ly/2HgdbXS in a report.

The Russian banking system has enough earnings capacity for absorbing credit losses arising from exposures to sanctioned companies, the rating agency said. Moody’s assessment is in contrast to that of Fitch Ratings, which said last week the US sanctions would limit Russia’s potential economic growth and severely impact targeted companies.

The US Treasury imposed sanctions earlier this month on seven Russian oligarchs and 12 companies they own or control, as well as 17 senior Russian government officials. Moscow calls these sanctions unlawful and has warned retaliation.

“Russia’s sovereign credit profile — its rating is Ba1 with a positive outlook — is well positioned to withstand the impact of new sanctions,” said Kristin Lindow, a Moody’s Senior Vice President and co-author of the report.

“Higher oil prices will help the government to make further progress in rebuilding its fiscal savings.”

The risk to Russia’s credit profile comes from the possibility of Russian entities being cut off from the international capital market for some time, Moody’s noted.

Moody’s expects the Russian government to increase support to regions facing a fall in revenues due to the sanctions.

GENEVA:

Also:

Russia on Thursday became the third powerful member of the World Trade Organization to challenge US tariffs on steel and aluminium, following China and the European Union.

Russia adhered to the same tactic used by the EU in challenging the tariffs under the WTO’s Safeguards Agreement, even though Washington has not characterised the measures as safeguards.

President Donald Trump’s administration has said the steel and aluminium tariffs were needed on national security grounds and are therefore permitted under international trade law.

“Although the United States presented the measures at issue as being adopted to address the threat that imports of steel and aluminium pose to the US national security, they are in essence safeguard measures,” a document written by Russia’s mission to the WTO said.

Safeguards can be allowed under WTO rules if the country imposing them can prove its domestic industry is under threat from imports.

Russian aluminium giant Rusal is stockpiling large quantities of aluminium at one of its plants in Siberia because US sanctions imposed this month have prevented it from selling the metal to customers, five sources close to the company said.

With the firm’s own storage space filling up with unsold aluminium, Rusal executives in Sayanogorsk, in southern Siberia, have had to rent out additional space to accommodate the surplus stock, one of the sources told Reuters.

“Aluminium sales have broken down. And now the surplus aluminium is being warehoused in production areas of the factory itself,” said someone who works on the grounds of one of Rusal’s two plants in Sayanogorsk.

Several people connected to Rusal said that Oleg Deripaska, the company’s main shareholder who along with the company was included on a US sanctions blacklist, visited Sayanogorsk this week for a closed-door meeting with staff.

Asked if the firm was stockpiling aluminium in Sayanogorsk, a Rusal spokeswoman declined to comment.