Russia, along with other commodity exporters, has suffered under the commodity crash with finances deteriorating and growth evaporating. However, swift remedial policy actions and a modest rebound in commodity prices has enabled Russia to regain the lowest investment grade status, according to IHS Markit (Nasdaq: INFO) a world leader in critical information, analytics and solutions.

“Greater foreign exchange liquidity as oil prices regain some ground and net capital outflows dwindle have convinced us to restore Russia’s medium-term sovereign risk rating to minimum investment grade from the top of the speculative range,” said Charles Movit, senior manager, CIS and Europe at IHS Markit. “Russia can expect some modest growth to resume over 2017.  Moderate further gains in oil prices and the return to economic expansion, albeit at much more moderate pace than seen prior to the global recession, will continue to support the sustainability of the country's private-sector external debt. These developments will also ease the fiscal situation, preserving the country's very modest public-sector debt to gross domestic product (GDP) ratio.”

“Russia was swift to let the rouble fall and raise interest rates in the face of lower oil prices. The budget was also revisited to retrench capital outlays and limit the widening of the fiscal deficit, factoring into our upgrade of Russia’s debt,” added Jan Randolph, director of Sovereign Risk at IHS Markit. Unlike others, such as Nigeria and the smaller African and CIS energy producers whose policy road maps out of trouble have been slower and less clear, Russia, like Brazil, has had the advantage of being here before in the face of commodity crashes and knew what to do; painful and politically difficult though these policy response measures often are.”

The upgrade for Russia in early April 2017 by the Sovereign Risk Service from Global Insight by IHS Markit highlights the importance of policy credibility for investment grade status.

The Sovereign Risk Service covers both short- and medium-term risks for 206 countries worldwide. It utilizes transparent sovereign risk ratings when assessing creditworthiness and trade credit risk and enables the comparison of IHS Markit ratings to the ratings of other agencies. For more information about the Sovereign Risk Service , please contact Paul.Hunt@ihsmarkit.com

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