Russian credit ratings agency (ACRA) issued its first sovereign rating for Russia, awarding the country an A- credit rating, which is significantly higher than the three leading international ratings agencies, bne Intellinews reports.
“Russia’s A- sovereign credit rating is supported by the low level and sustainable structure of public debt, strong external position, and an effective monetary policy coordinated with fiscal policy that significantly improves macroeconomic stability. The rating is constrained by the low potential for economic growth, limited diversity of exports, lack of transparency of the Russian Government’s obligations to a number of state-owned companies, weakness of institutions, and the threat of new sanctions capable of limiting investment and hindering technology-based cooperation and trade with potential foreign partners,” ACRA said in a press release.
Set up in 2015, ARCA (Analytical Credit Rating Agency) has become part of the woodwork and an ARCA rating is not just needed to issue ruble denominated bonds, but the Bank of Russia has written into the regulations that local banks have to get at least an A grade rating from ARCA in order to hold a banking license.
At the same time, thanks to the sanctions the big three international agencies have been slowly pulling back from the Russian market and chosen not to re-accredit themselves as local agencies with the central bank. Today about 50 of the top Russian companies maintain an international rating. ARCA has expanded and now rates some 200 Russian entities.
Russia’s credit ratings have been improving all year and all the main international agencies have Russia rate at an “investment grade” rating. But there has been a long running dispute between the Kremlin and the international ratings agencies, as the Russian government claims that the rock solid nature of its finances are not adequately reflected in its international ratings.
Currently Moody’s has Russia at Baa3 with stable outlook, Fitch with BBB with neutral outlook and Standard & Poor’s (S&P) with BBB- with stable outlook.
But ARCA has given Russia a significantly higher rating as Russia has never won a “A” level rating from any of the international ratings agencies despite having one of strongest macroeconomic fundamentals of any major economy in the world.