S&P downgrades Russia’s rating

Cite capital outflows, 'rapid depletion' of foreign currency reserves;
Report and analysis by Ellen Pinchuk of Bloomberg News.
Video courtesy of Bloomberg via Clip Syndicate
Due to warning of the "rapid depletion" of Russia's massive reserves, Standard & Poor's has lowered Russia's long and short-term sovereign foreign currency credit ratings from BBB+/A-2 to BBB/A-3 with a negative outlook.

Here is from Novosti, the Russian News & Information Agency on December 8:

Standard & Poor's has lowered Russia's long and short-term sovereign foreign currency credit ratings from BBB+/A-2 to BBB/A-3 with a negative outlook, the international rating agency said on Monday.

The long-term local currency rating was also lowered to BBB+ from A-, while the short-term local currency rating was affirmed at A-2, S&P said.

"The lowering of the ratings on Russia reflects risks associated with the sharp reversal in external portfolio and other investment flows, which has increased the cost and difficulty of meeting the country's external financing needs," Standard & Poor's credit analyst Frank Gill said.

Since August 2008, Russia's international reserves, which hold gold and foreign currency, have plunged from $583 billion to $455 billion, amid the financial crisis.

"Pressures on the financial account stem from corporations prepaying or hedging foreign exchange borrowing, from banks refinancing their foreign currency obligations domestically with public sector banks, and from resident capital flight, while the central bank tries to offset intensifying pressures on the nominal exchange rate," S&P said.

Redemption profile as % of total liabilities on the r.h. scale
Source: company data, Dealogic, Cbonds, Raiffeisen RESEARCH
Via RZB
ETFs/Stocks :

Market Vector Russia ETF Trust  RSX  14.55  +1.17 (8.74%)

Related Posts :

Russia will likely face a very hard landing

Sources :

1. Novosti: S&P downgrades Russia's rating to BBB/A-3, outlook negative, December 8, 2008 15:57
2. RZB: S&P downgrades rating of Russian Standard Bank, November 19, 2008
3. The Wallstreet Journal: S&P Downgrades Russia, Citing Falling Reserves, December 9, 2008

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