Russian Currency Rating is Upgraded to BBB+ by Fitch

Fitch Ratings - an international rating agency - upgraded Russia's foreign and local currency Issuer Default Ratings (IDR) to BBB+.  The shift from BBB is attributed to Russia’s noticeable economic growth, fueled by high commodity prices.

"Enduringly high commodity prices are strengthening Russia's macroeconomic and financial position at a remarkable pace, further reducing the likelihood of any future risk to sovereign debt service," said the agency's chief sovereign debt analyst for emerging European markets, Edward Parker.

This year, Russia is expected to generate a budget surplus of around 6.5% of GDP, which may result in the availability of additional $22 bln for making a pre-payment to the Paris Club, thus reducing the debt-to-GDP ration down to 11% of GDP by the end of this year, while the ‘BBB’ rating median is at 34%.  Moreover, Russia’s fattening Stabilization Fund is expected to reach $89 bln at the end of 2006, up by $46 bln from the end of 2005, Fitch said.  Russia’s foreign exchange reserves are expected to boost to $271 bln by the end of the year. Russia stands a chance of becoming the 10th largest economy in the world, going up from 22nd place in 1999.

Among the negative factors, that could restrain the improvement of Russia's credit status, Fitch named the country’s dependence on the export of natural resources, bureaucracy, corruption and uncertainty over the rule of law. Source: RIA Novosti