Let them maintain these ratings themselves

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Russia is considering the possibility of refusing to work with global rating agencies, announced the Ministry of Finance a few days after another credit rating downgrading of the country. Russian market players note that if Russia refuses the service of the "Big Three", than the ratings will be even more biased and Russian budget will hardly benefit.

Russia is considering the possibility to cancel the contract with global rating agencies, said the Deputy Finance Minister Sergei Storchak on Tuesday.

"We can withdraw from the contract for maintaining our credit rating online. We pay for these agreements, said the Deputy Minister. We should put an end to this situation, put it on a break, let them maintain these ratings themselves". Anton Siluanov`s Deputy complained that for ten years the Russian authorities had been cooperating with the major rating agencies slowly getting out of ratings below the investment grade". At the same time Russia had outstanding debts at that time.

"Now we have all the debts paid off and the ratings are below the investment grade again. In my opinion, this is irreliable," said Storchak.

Proposal to refuse working with foreign rating agencies was put forward a few days after the global rating agency Moody's had downgraded Russia's sovereign credit rating from "investment» Baa3 grade to "speculative" Ba1 rating grade with a negative outlook.

Moody's has become the second global rating agency to downgrade Russia`s sovereign credit rating to "junk" status. Earlier on January 26 the global rating agency Standard & Poor's made the same decision to downgrade the rating of Russia from BBB- with a negative outlook to the speculative BB + grade.

As a result at the moment the only agency of the "Big Three" assesses the credit rating of Russian economy above the "speculative grade" is Fitch Ratings.

"Denying global rankings is an attempt to "solve the problem by getting rid of it", so the problem does not disappear," said Head of the Analytical Department of the National Rating Agency Karina Artemyev to "Gazeta.ru".

It will be difficult to replace ratings of the "Big Three" rapidly, experts admit. According to Russian legislation only accredited rating agencies have the right to assign credit ratings to government bonds or valuable securities of companies.

There are nine companies listed in the register of accredited rating agencies which has been approved by the Ministry of Finance since 2004. Six of them are Russian. The largest are "Expert RA", the National Rating Agency (NRA), AK & M and "Rusrating". They can be compared in terms of the number of employees. Now "Expert RA" has 50 analysts, the NRA - 17, other agencies – up to 10.

However, according to the portal Rusbonds, none of the Russian rating agencies today hold contracts to assess Russian government bonds. Moody's and Fitch are the official assessors of Eurobonds Russia-2030-11t. These agencies assign ratings to federal loan bond as well.

Russian credit agencies work in the corporate sector only. For example, the ratings of "Gazprom" bonds are assigned by Fitch`s and Moody's analysts, as well as by the Russian National Rating Agency.

However, refusal to use services of the agencies doesn`t mean that the "Big Three" will cease to assign credit ratings to Russian valuable securities. Sovereign ratings can be assigned on the basis of public information. A bright example of such assignment is the Chinese rating agency Dagong which assesses Russia's foreign currency credit rating at A.

A few hours after Sergei Storchak`s statement the Assistant Finance Minister Svetlana Nikitina explained that cancellation of agreements with global rating agencies is not a final decision. "We will continue to pursue an open dialogue. We will provide all the agencies with the relevant macroeconomic information on a regular basis as before. We will continue to clarify all the aspects of our budgetary and financial policies in order to improve the rating in the mid run," noted the Assistant Finance Minister.

Text and pictures by "Gazeta.ru".