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21 October 2003
Russia’s recent international investment rating will help the country finance its further economic growth. The widely discussed risk of excessive speculative capital flowing into Russia is exaggerated.
On October 8, the international rating agency Moody’s Investors Service raised Russia’s sovereign rating by two grades from Ba2 to Baa3. At the same time, Moody’s raised its rating of Russia’s Eurobonds, internal hard currency securities, and hard currency bank deposits.
The agency explained that its decision was spurred by “Russia’s increasing adherence to a reasonable policy for managing its debts and finances; substantial improvement in the areas of debt and liquidity; the formation of a stabilizing fund to compensate for possible price declines on natural resource markets, as well as the reduction of political risks in the country.”
Moody’s announcement had an explosive effect, stirring up a storm of contradictory opinions among Russian and foreign analysts. “I understand why Moody’s decided not to wait until the end of electoral campaigns and raise the rating right now,” says Philip Hanson, a professor at the Centre for Russian and East European Studies at the University of Birmingham. “The changes that have occurred in Russia over the last five years are sufficiently profound and irreversible. Thus, even if reforms proceed more slowly after the elections, there is confidence that Russia will remain a profitable place to invest. Not even the YUKOS Affair can affect this.”
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