S&P's ups Russia's short-term Fx rating to A-2.

By bne IntelliNews June 28, 2012
Standard & Poor's affirmed Russia's long-term Fx rating at BBB, long and short term national currency ratings at BBB+/A-2, while upgrading the short-term Fx rating from A-3 to A-2, outlook Stable. Agency attributed the decision to a revision of the rating criteria, namely consolidated government's assets slightly exceeding the liabilities due to past surpluses and moderate current deficit. Agency also notes Russia's position as net creditor, and liquid foreign assets overall slightly exceeding external debt estimated at 9.2% of GDP. At the same time S&P's stresses the persisting structural dependency on hydrocarbons and other natural resources. Agency estimates that a USD 10/barrel oil price decline will lead to a 1.4% of GDP decline in revenues. Agency's base scenario sees oil prices at the level of USD 100, at which 2012 will see a slight deficit expanding to 1.5% of GDP deficit by 2015. At the same time S&P's does not see Russia maintaining a net-creditor status by 2014. Agency expects GDP growth by 2015 to amount to 3.5%, constrained by significant structural limitations of competitiveness and investment climate, including the state-centralized economic model and maintained strong ties between the politics and the business.
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