Putin Bonds headed to the Junk Yard

[alice malice]

A good idea for sure....though I don't think bond traders trust
anything that comes out of China, and the reality is that Russian debt
is now priced as junk, and this, another blow to Putin, is going to
cost Russia billions. Of dollars. Obama is hitting him in his
reserves. Good move, O.

On Tue, Oct 28, 2014 at 7:22 AM, Kai Frederik Lorentzen
<lorentzen at hotmail.de> wrote:
>
> 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
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