Ratings and Rankings for Russia
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Last updated: July 15, 2017
About Fitch Ratings
Fitch Ratings elaborates and releases internationally recognised credit ratings for issuers and obligations in corporate, public and structured finance debt markets. Those ratings assess the capacity to meet commitments using comparable and globally applicable scale.
Fitch Ratings web-site: https://www.fitchratings.com/
Fitch offers the following range of key indicators involved in sovereign (country) risk assessment with major indicator being Issuer Default Rating (IDR) that reflects a country’s relative vulnerability to default on financial obligations:
- Long-term IDRs for commitments in both foreign and local currency.
- Short-term IDRs solely for foreign currency commitments. Short-term ratings are typically assigned to obligations with initial maturity of up to 13 months.
- Outlook. In the course of a country’s IDR review Fitch also provides outlooks for both foreign and local currency IDRs that reflects the likely direction of further reviews given the current trends of the economic development. Outlook can be negative, positive or stable.
- Country Ceiling represents Fitch’s assessment of Transfer and Convertibility risk that concerns introduction of capital and exchange controls by the sovereign authorities that would limit private sector’s ability to convert local currency into foreign currency and transfers to non-resident creditors. Country Ceilings factually caps possible rating for the most foreign currency issuers in a given country.
Rating Scale of Fitch Ratings
Long-Term Sovereign Rating Scale
The following scale is used for sovereign issuer long-term ratings by Fitch:
|AAA||Highest credit quality||Investment||Lowest risk of default. The payment capacity is highly unlikely to be affected by foreseeable events.|
|AA||Very high credit quality||Investment||Very low risk of default. The payment capacity is not significantly vulnerable to foreseeable events.|
|A||High credit quality||Investment||Low risk of default. Strong capacity of payment of financial commitments.|
|BBB||Good credit quality||Investment||Low current expectations of default risk. Adequate payment capacity that can be influenced by changing economic and business conditions.|
|BB||Speculative||Speculative||Elevated vulnerability to default risk, material default risk exists with a limited margin of safety. Vulnerability to default risk in the case of adverse changes in business or economic conditions, still with sufficient business or financial flexibility supporting meeting financial commitments.|
|B||Highly speculative||Speculative||Material default risk exists with a limited margin of safety. Financial commitments are currently met, but capacity for further payments is vulnerable to deteriorating economic conditions.|
|CCC||Substantial credit risk||Speculative||Default is a real possibility.|
|CC||Very high levels of credit risk||Speculative||Default of some kind appears probable.|
|C||Exceptionally high levels of credit risk||Speculative||Default is imminent or inevitable, or the issuer is in standstill. This includes the following issuer statuses: (1) issuer has entered into a grace or cure period after non-payment, (2) issuer has entered into a temporary negotiated waiver or standstill agreement after a payment default, and (3) Fitch otherwise believes a RD or D status to be imminent or inevitable.|
|RD||Restricted default||Speculative||Issuer has experienced an uncured payment default on obligation but has not entered into bankruptcy|
|D||Default||Speculative||Issuer has entered into a formal bankruptcy procedure.|
In most cases modifiers (”+” or “-“) may be appended to a rating in order to indicate relative status within major rating categories.
BBB- rating is generally considered to be the lowest level of investment grade, while the ratings below are typically referred as speculative / “junk” grade ratings.
Short-Term Sovereign Rating Scale
The following scale is used for sovereign issuer short-term ratings by Fitch:
|F1||Highest short-term credit quality||Investment||Strongest capacity for timely payment, sometimes “+” modifier is also used for exceptional strength.|
|F2||Good short-term credit quality||Investment||Good capacity for timely payment.|
|F3||Fair short-term credit quality||Investment||Adequate capacity for timely payment.|
|B||Speculative short-term credit quality||Speculative||Minimal capacity for timely payment with increased vulnerability to near term adverse changes in financial and economic conditions.|
|C||High short-term default risk||Speculative||Default is a real possibility.|
|RD||Restricted default||Speculative||Issuer has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations.|
Detailed explanations on the Fitch Rating scale (including limitations, relationship between short-term and long-term ratings, etc.) can be found at:
Fitch Sovereign Ratings for Russia
Fitch released its first Issuer Default Rating (IDR) for the Russian Federation on October 7, 1996.
In the course of 1998 the Fitch rating for Russia was numerously reviewed reflecting rapidly deteriorating economic environment before August 1998 crisis.
After 1998 the long-term IDR of Russia was gradually improving reaching its maximum at BBB+ in 2006-2008.
The next crisis of 2009 had not substantially increased default probability of Russia due to sufficient country reserves and, therefore, IDR did not overcome dramatic changes settling at the level of BBB.
The events in Ukraine in 1Q 2014 forced Fitch to review the Russian IDR outlook to negative, and the rating was consequently reviewed to BBB- in January 2015 with negative outlook.
On October 16, 2015 the long-term IDR for Russia was changed to BBB- with negative outlook that is the minimal standing of the investment grade.
It is noticeable that as of February 2016 Fitch was the only rating agency from the Top 3, which maintained the long-term rating of Russia at investment grade (S&P and Moody’s lowered Russian sovereign rating to “junk” grade in 2015).
On April 15, 2016 Fitch affirmed the Russian IDR at BBB- with negative outlook.
On July 22, 2016 Fitch applied its recent criteria changes to ratings of Russia. The agency affirmed Russia's Long-Term Local Currency (LTLC) IDR at BBB- with negative outlook. The Short-Term Foreign Currency (STFC) IDR was affirmed at F3 and a new Short-Term Local Currency (STLC) IDR of F3 was assigned.
On October 14, 2016 Fitch revised the Russian IDR changing the outlook from negative to stable and affirming the long-term foreign and local currency ratings at BBB-.
On March 31, 2017 Fitch affirmed Russian IDRs at BBB- with stable outlook.
The next review date of the Russian sovereign rating will be September 22, 2017.
Fitch Retrospective Ratings for Russia
|Date of review||Foreign Currency Rating||Local Currency Rating||Country Ceiling|
|October 7, 1996||BB+||B||-||-||-||-||-|
|February 12, 1998||BB+||B||negative||-||-||negative||-|
|March 10, 1998||BB+||B||-||-||-||-||-|
|June 5, 1998||BB+||B||negative||-||-||negative||-|
|June 7, 1998||BB||B||negative||-||-||negative||-|
|July 30, 1998||BB-||B||-||-||-||-||-|
|August 17, 1998||B-||B||negative||-||-||negative||-|
|August 27, 1998||CCC||C||-||-||-||-||-|
|February 14, 2000||CCC||C||positive||-||-||positive||-|
|May 8, 2000||B-||B||-||-||-||-||-|
|August 29, 2000||B||B||-||B-||-||-||-|
|September 21, 2000||B||B||stable||B-||-||stable||-|
|July 17, 2001||B||B||positive||B-||-||positive||-|
|October 4, 2001||B+||B||stable||B||-||stable||-|
|May 2, 2002||BB-||B||positive||BB-||-||positive||-|
|May 13, 2003||BB+||B||stable||BB+||-||stable||-|
|November 18, 2004||BBB-||F3||stable||BBB-||-||stable||-|
|August 3, 2005||BBB||F3||stable||BBB||-||stable||-|
|July 25, 2006||BBB+||F2||stable||BBB+||-||stable||-|
|November 9, 2008||BBB+||F2||negative||BBB+||-||negative||-|
|February 4, 2009||BBB||F3||negative||BBB||-||negative||-|
|January 22, 2010||BBB||F3||stable||BBB||-||stable||-|
|September 8, 2010||BBB||F3||positive||BBB||-||positive||-|
|January 16, 2012||BBB||F3||stable||BBB||-||stable||BBB+|
|January 31, 2014||BBB||F3||stable||BBB||-||stable||BBB+|
|March 21, 2014||BBB||F3||negative||BBB||-||negative||BBB+|
|January 9, 2015||BBB-||F3||negative||BBB-||-||negative||BBB-|
|July 3, 2015||BBB-||F3||negative||BBB-||-||negative||BBB-|
|October 16, 2015||BBB-||F3||negative||BBB-||-||negative||BBB-|
|April 15, 2016||BBB-||F3||negative||BBB-||-||negative||BBB-|
|July 22, 2016||BBB-||F3||negative||BBB-||F3||negative||BBB-|
|October 14, 2016||BBB-||F3||stable||BBB-||F3||stable||BBB-|
|March 31, 2017||BBB-||F3||stable||BBB-||F3||stable||BBB-|
Sources: Credit Writedowns (1996-2010); press releases of Fitch Ratings: January 16, 2012, January 31, 2014, March 21, 2014, January 9, 2015, July 3, 2015, October 16, 2015, April 15, 2016, July 22, 2016, October 14, 2016, March 31, 2017.