08/13/1998 15:46:48 Moody's analyst says Russia financing gap a worry
By Apu Sikri
NEW YORK, Aug 13 (Reuters) - Russia's increasing difficulty
in rolling over short-term Treasury bills in the absence of
investor confidence was a major catalyst in the decision by
Moody's Investors Service to downgrade the republic's credit
rating, a senior analyst said.
"If the GKOs are not rolled over, there is a big financing
gap," Jonathan Schiffer, senior analyst at Moody's, told Reuters
in a telephone interview.
"If you plot it out and assume current trends, the gap is
larger next January, larger next May, and it goes on," he
"If you look at the best case scenario from their point of
view, there is still a big gap," he said. "I don't want to use
the word default, but there is a big gap," Schiffer said.
On Thursday, Moody's downgraded Russia's country ceiling for
foreign currency bonds and notes to B2 from B1.
"It is not clear where the money will come from. We've been
watching investor reaction to this. When you put the two
together, the situation has worsened considerably since our last
move which was in May. This is simply not a short-term problem,"
the analyst added.
The chances of a devaluation of the rouble are now "greater
than they were three months ago," Schiffer said.
He added that if a devaluation were to occur, it would make
it more expensive for the republic to service its debt and have
wide ramifications for the banking system.
Meanwhile, the U.S.'s other major credit rating agency,
Standard and Poor's, told Reuters it was "concerned" about the
Russian situation and that it was reviewing the country's
current single-B-plus foreign currency debt rating.
S&P has a stable outlook for Russia's debt ratings.
(( -- N.A. Treasury Desk; 212 859-1562 ))