today in the media every now and then skips posts on assignment with a specific assessment of Russia called "junk" rating.This definition is confusing for many people, because the average person can understand the bad financial terms, and if a rating is more or less clear, of such jargon as "garbage", you need to tell in detail.On this and other pressing matters of the economy later in this article.
What is it
To understand what it means to "junk" rating, we must first understand the definition of "credit score."Any individual, company or country can have their solvency rating.For example, banks in most cases make up their own rating of the borrower, and when it comes to assess the consistency of large corporations or states, are engaged in specialized independent rating agencies.Among them are the FitchRatings, Moody's and Standard and Poor's (S & amp; P), whose activities extend to the whole world, and listen to their opinion the majority of investors.
to the state, these figures are based on analysis of the economic situation of the national currency and other features.
not to say that there is some common system of rating, each agency their methods and indicators.All ratings can be divided into the obligations of the highest, high, medium quality.The following are risky and speculative guarantees, as well as forecasts of imminent default."Junk" rating - a commitment just this type.
causes of the crisis in Russia
Although in recent years, Russia's credit rating was not at a high level, but it was not "garbage" and the solvency of the country especially no doubt.The problems began in 2014, after the annexation of the Crimea and the subsequent sanctions imposed by the US and the EU.All compounded by the fall in oil prices, triggering a significant depreciation of the ruble.These and other developments have given rise to talk about the crisis, and even the possibility of a default in Russia.
usually countries with "junk" rating have a weak economy with many problems.Now, the international community started talking seriously on including Russia in this unpopular list.Incidentally, the last time the country's credit rating was on the level of "junk" in 2005.
At the end of 2014 the ex-Finance Minister Alexei Kudrin said that the country begins a full-fledged economic crisis.According to him, Russia in 2015 could be assigned to "junk" rating, it will be caused not only by low oil prices - also provoke sanctions downturn in the economy.According to the forecast of the Ministry of the former head of the country's GDP will decline by at least 2%, assuming that oil will cost $ 80, at low prices near $ 60 drop in the economy could reach 4%.
Kudrin also believes that the Government is inadequate policies, so low or zero growth is inevitable and without external difficulties related to oil prices and sanctions.
At the beginning of 2015, Fitch lowered the assessment of the solvency of Russia to the level of BBB-, which is the last step in the investment area, goes on "junk" rating.Russia has been given a negative outlook for the near future.
Shortly thereafter, the rating agencies S & amp; P and Moody's downgraded Russia's credit rating to speculative, or so-called "junk."According to their reports, one of the reasons for the decline is the continuing conflict assessments in Ukraine, which is, anyway, can also affect the economic situation in Russia itself.In addition, the negative impact on the ranking of low oil prices and an unstable currency.
agency Moody's, among others, believes that there is a likelihood of the adoption of such decisions by the Russian government, which to some extent may affect the country's external debt service on time.
worth noting that if the evaluation of different agencies differ, first of all take into account the worst prognosis.
rating agencies "Big Three" are independent institutions, their assessment is considered to be impartial and objective.However, the fact that the agencies are assigned one after the other "junk" rating of Russia, the Russian Foreign Ministry as a political decision, unjustified in economic terms and aimed at easing the country.The Ministry assured that such estimates are part of the Western policy of pressure on Russia by means of sanctions.
is noteworthy that the decision by Moody's to assign Russia assessment Ba1, which is just the same implies a "junk" rating, Kudrin considered maloobyasnimym, despite the fact that he had previously speculated on the possibility of reducing Russia's sovereign rating to the speculative level.It is puzzling, and the fact that up to this rating was revised just a month ago - it is not clear why it is needed now.
Than it threatens the country
itself "garbage" rating is not much danger, especially as the economy increasingly influenced by such key factors as the price of oil, the ruble and zakreditovannost companies and households.It can be said that the low rating reflects the existing difficulties.
Countries with "junk" rating may experience difficulty in obtaining credit abroad, as in the case of Russia, given the imposed sanctions on it, low ratings agencies there is little change - the flow of investment into the country has decreased significantly in 2014.However, many investment funds impose a ban on investment in the economy of a "junk" rating, so inflow of foreign funds may be somewhat reduced, but it is unlikely to be critical for the economy.
Talk about default
As for the rumors about the possibility of default, they are certainly an exaggeration and injection panic.If we talk about low estimates, up to Category D, which means a high possibility of default, Russia is still far.
«junk" rating - it is not a sentence, besides the external debt of the Russian Federation is not so great and is a little more than 10% of GDP, while in other countries with a higher ranking, the public debt may exceed their GDP.If necessary, Russia can service its obligations due to foreign exchange reserves.
What is "garbage" rating for Russia
First of all, it should be said that the "garbage" rating does not mean a final slide of the country into the pit of the crisis.Against the backdrop of bad evaluations Russia's solvency, as well as low oil prices, analysts had predicted a further fall in the ruble and other problems in the economy.However, in the spring of the ruble significantly strengthened against the dollar and oil prices stabilized.The Government is taking appropriate measures to overcome the crisis.
For example, a "trash" Ukraine's rating actually reflects the sorry state of affairs in a country whose economy depends on Western credits.In the case of Russia, everything can change.Sooner or later the situation will improve, and then rating agencies revise their estimates for the better.