08/26/1998 15:49:05 FITCH IBCA CUTS RUSSIA'S LONG-TERM FOREIGN CURRENCY RATING TO CCC FROM B-MINUS
Обновлено: 28 авг. 2018 г.
(Press release provided by Fitch IBCA).
NEW YORK Aug 26 - Fitch IBCA, the international rating
agency, today downgraded Russia's Long-term and Short-term
foreign currency ratings from 'B-' to 'CCC' and 'B' to 'C',
respectively, indicating that the agency believes there is a
real possibility that the Russian government will default on
more than USD140bn of external debt obligations.
The ratings are removed from RatingAlert negative.
The new rating applies to all senior unsecured sovereign
debt issued by the Government of the Russian Federation and
places a ceiling on the senior unsecured Long-term foreign
currency rating of all Russian entities.
Fitch IBCA said that the limited margin of safety on
meeting external public debt payments - previously afforded by
the level of official gross foreign exchange reserves and
enhanced financial support from the IMF - has been eroded by
recent political and financial developments in Russia.
Gross foreign exchange reserves have fallen substantially,
prompting the Central Bank of Russia (CBR) to announce today
that it will no longer undertake further substantial
intervention in support of the rouble.
The harsh restructuring terms imposed on foreign and
domestic holders of GKOs and OFZs (treasury bills and bonds
respectively) will provide substantial cash flow relief to the
budget and does provide the Russian authorities with an
opportunity to put in place key fiscal and structural reforms.
But the agency warns that it is now much more likely to be
used to avoid planned spending cuts and tax increases, and
clear public sector wage and pension arrears.
The debt restructuring and the (as yet unspecified)
restrictions on secondary market trading of the new rouble
instruments will further weaken the liquidity of Russian
The CBR will be under continuing intense pressure to supply
liquidity to the banking system that in turn will further
undermine the rouble.
Moreover, with the government now unable to raise funds
from domestic and international capital markets, the CBR will
be forced to print money to finance any future shortfall of
revenues over spending.
Recent political developments have also significantly
increased the risk that the Russian authorities will backslide
on their policy commitments to the IMF, putting at risk further
funding from the IMF.
Concessions to the State Duma on the "anti-crisis package"
of fiscal and structural reform measures agreed with the IMF
are likely in an attempt to win the former's support for Mr
Chernomrydin's nomination as Prime Minister and broaden the
political base of the government.
The agency thus expects that the next USD4.3bn of funding
from the IMF scheduled to be disbursed in the second half of
September will be subject to delay.
Fitch IBCA said that approximately USD4.5 bn of payments on
public external debt would fall due in late 1998 and more than
USD16bn in 1999 (though public external debt service in 1999
would be less if there were no further IMF disbursements in
Given the declining level of foreign exchange reserves and
the risk that IMF funding will be delayed, there is a real
possibility of default by the Russian government on its