Russia’s rating comes with sanctions stress

our analysis is that the economy and public finances are in good shape and can withstand new sanctions Kristin Lindow, analyst at Moody’s

london — Russia’s chances of reclaiming the ‘investment grade’ credit rating it lost three years ago are rising, potentially causing headaches for indextracking bond buyers who will be wary of US sanctions. A move by Moody’s late last month means that both it and S&P Global now have Russia’s foreign currency debt rating just one step away from the coveted upper bracket.

Targeted by Western economic and financial sanctions since 2014, after it intervened in Ukraine, Russia’s economy began to recover last year after a steep economic downturn, thanks to higher oil prices and some prudent measures by the government and central bank.

With that pick-up ongoing, one of the lowest debt levels in the world at just over 16 per cent of GDP, plus nearly half a trillion dollars in reserves, many argue the reinstatement of Russia’s ‘investment grade’ status is long overdue.

“Our analysis is that the economy and public finances are in good shape and can withstand new sanctions,” Moody’s analyst Kristin Lindow told Reuters last week.

That was before the United States published a list of oligarchs close to the Kremlin and what sanctions may follow is as yet unknown.

But S&P also has Russia on its upgrade watch list and expects to make a decision this year. Its next review is due by mid-March.