Scope Ratings reviews its ratings either yearly, or at least every six months in the case of sovereign, sub-sovereign and supranational issuers. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.

Scope performs monitoring reviews to determine whether outstanding ratings remains proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology, latest developments, and the rated entity’s financial and operational aspects relative to similarly rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the Russian Federation (BBB/Stable; S-2/Stable) on 14 July 2020. This monitoring note does not constitute a rating action nor indicates the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

Russia’s long-term ratings at BBB/Stable are underpinned by the following credit strengths: i) the sovereign’s robust public finances and conservative fiscal policy with an improved fiscal policy framework, underpinned by low general government debt and sizeable government cash deposits, which have strengthened budgetary flexibility; and ii) Russia’s strong external economic risk-profile underpinned by high foreign reserve adequacy, a robust external-creditor position and a strong commitment to inflation-targeting. These factors increase the country’s resilience to external shocks and mitigate the economic impact of a potential tightening in sanctions. Challenges relate to: i) the economy’s low growth potential, ii) weak governance, and iii) the economy’s high vulnerability to geopolitical risk, which has brought ramifications such as a restricted international market access for the private sector.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Public Finance Sovereign Ratings, 21 April 2020) is available on https://www.scoperatings.com/#!methodology/list.

This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.

Lead analyst: Jakob Suwalski, Director

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