CIS corporates may have stable credit quality across Europe
Non- financial corporate issuers in the Commonwealth of Independent States (CIS) are more likely than those in other regions across Europe to maintain their current rating in the next 12-18 months, due to resilient domestic GDP growth boosted by high commodity prices, says Moody’s Investors Service in a Special Comment published today.
Most rated CIS companies have restored their financial stability in recent years as a result of high oil and commodity prices thereby enhancing their ability to weather macroeconomic weakness and market volatility in 2013, says Victoria Maisuradze, Associate Managing Director and Head of Moody’s Corporate Finance Group in Russia. Within the CIS corporate sector, the ratings of only five issuers out of a total of 71 rated by Moody’s in the region had a negative outlook or were on review for downgrade as at 30 September 2012. There were no defaults in the region over the past year and Moody’s does not expect a material increase in downgrades or negative rating actions, or a spike in defaults, in the next 12 months. All of the CIS corporates’ ratings are in the B-rating category or higher, which implies a low near-term default risk.
Moody’s expects that a further slowdown in global economic growth would most adversely affect companies in the mining, steel and petrochemicals industries. However, such a scenario, if it were to happen, would not necessarily result in negative rating actions as these issuers have reasonably strong credit metrics relative to their rating categories.