Putin Bonds headed to the Junk Yard

[Kai Frederik Lorentzen]

http://www.ft.com/cms/s/0/03ae1bb8-eb2c-11e3-9c8b-00144feabdc0.html#axzz3HRB6EO6Z

*Russia and China plan own rating agency to rival western players*

By Kathrin Hille in Moscow

Russia and China have agreed to set up a joint rating agency as Moscow’s 
stand-off with the west over Ukraine has made it more eager to establish 
institutions that would reduce its dependence on the US and Europe.

“In the beginning, the agency will assess Russian-Chinese investment 
projects with a view to attracting of [investors from] a number of Asian 
countries,” Anton Siluanov, Russia’s finance minister, said in Beijing, 
according to his ministry. “Gradually, based on the progress and 
authority of such an agency, we believe it will rise to a level where 
its opinions will attract other countries.”

The finance ministry did not give details on the time frame and detailed 
conditions for the establishment of the agency, but people familiar with 
the plans said it was likely to involve Chinese rating agency Dagong and 
a state-backed institution from Russia.

The Brics group of large developing countries – Brazil, Russia, India, 
China and South Africa – has long discussed plans to set up its own 
rating agency, along with a Brics bank. Member countries complain that 
globally dominant agencies such as S&P, Moody’s and Fitch focus on 
developed countries and fail to assess developing economies fairly.


On 28.10.2014 11:17, alice malice wrote:
> Besides the hit to a country's image of being rated 'junk,' such a
> downgrade can push its borrowing costs up. Many mainstream investment
> and pension funds have rules preventing them from buying anything not
> classed as investment grade.
>
> According to S&P's own Market Derived Signal (MDS) based on
> comparisons of various countries' ratings, CDS and bond prices,
> markets have been treating Russian debt as junk since early March
> anyway.
>
> Traders are currently pricing it as if it were a BB, a full two steps
> below its actual grade, but there has been no further shift down in
> the MDS in recent weeks, something that often happens before a rating
> is cut for real.
>
>
>
>
> http://www.reuters.com/article/2014/10/24/ukraine-crisis-russia-ratings-idUSL6N0SJ4YK20141024
> -
> Pynchon-l / http://www.waste.org/mail/?list=pynchon-l
>
>

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