November 23rd, 2011

No credit rating boost seen as Russia joins WTO

As reported in Bloomberg BusinessWeek, Russia is not likely to see an increase to its credit rating after entering the World Trade Organization later this winter due to “the country’s [poor] investment climate and institutional weaknesses,” according to two of the ratings agencies, Standard & Poor’s and Moody’s Investors Services.

Moody’s senior credit analyst Dietmar Hornung said that Russia must confront “institutional weaknesses” such as corruption and the lack of rule of law protections “to reap the full benefits from WTO entry.” The agencies cited the leading role still played by state monopolies in Russia as another reason to keep its debt rating at existing levels.

Currently, S&P rates Russia’s debt at BBB, the second-lowest investment-grade rate, which is on par with Peru, Bulgaria and Bahrain. Moody’s rates Russia at Baa1, their third-lowest investment grade level, which is one above Brazil and four below China.

You can read the full article here.

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