Bloomberg News

Russia Debt-Rating Outlook Cut to ‘Stable’ by Moody’s

December 12, 2008

Russia’s credit-rating outlook was lowered to “stable” from “positive” by Moody’s Investors Service, which cited “ineffective” efforts to shore up the financial system.

The world’s biggest energy producer has drained $161 billion, or 27 percent, of its reserves since August to support the ruble as oil prices declined. The currency is headed for its worst week since at least 2003 against the euro after the central bank widened the ruble’s trading band for the fifth time in a month yesterday.

The attempts to let the ruble gradually devalue “without amplifying banking and financial stability” have been “ineffective and extremely costly for official reserves,” Moody’s Vice President Jonathan Schiffer said in an e-mailed statement today.

Standard & Poor’s lowered Russia’s long-term debt rating for the first time in nine years this week to the second-lowest investment-grade rating of BBB, citing capital outflows and depletion of reserves.

Moody’s ranks Russia’s debt Baa1, its third-lowest investment-grade ranking, level with South Africa and Thailand.

The probability of Moody’s raising ratings in the next 12- 18 months has “diminished considerably,” Moody’s said. The stable outlook reflects Russia’s still-favorable credit metrics relative to other countries rated in the same range, the report said.

Separately, Moody’s lowered to “stable” the Baa1 long- term foreign-currency ratings of state-owned lenders OAO Sberbank, VTB Group and its two subsidiaries VTB North-West and VTB-24, Russian Agricultural Bank, Vnesheconombank, OAO Gazprombank and Bank of Moscow.

To contact the reporter on this story: Denis Maternovsky at

To contact the editor responsible for this story: Brad Cook at

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