Russia is an important business market
, as the state is one of the most powerful economies in the world. Foreign investors who want to expand their business activities in Russia
should know that several industries reported very good financial results. Credit rating
is one of the instruments designed in order to assess the economic environment in a country.
At the moment, Russia’s credit ratings are situated in the B category, showing a moderate vulnerability to risk; various values have been awarded, in accordance with the credit agency which has presented the study.
The Standard&Poor's credit agency has awarded Russia with the BB+ rating, which is an indicator of the fact that the Russian market is not in a vulnerable position in terms of paying its debt. The BB+ rating is given for the long term financial obligations and it refers to the ability of the state to pay its credit in accordance with the contractual terms.
BB+ rating indicates that Russia has the possibility to improve its financial position, as the "+" expresses that the Russian rating may be raised; this signifies that Russia is a stable market, which has the financial means of respecting its credit terms.
Moody's offered Russia the Ba1 rating, which is referring to the fact that the state has a flat likelyhood of a financial shock; at the same time, it expresses that the Russian government has a low level of gross debt.
What is credit rating?
The credit rating analyses the credit risks of a certain financial instrument or financial entity. The index is measuring how trustworthy a borrower can be for the debt incurred.
can be given to any type of entity
which borrows money; thus, when computing the credit rating
, the following entities are taken into consideration:
• local authorities;
• state authorities;
Credit ratings range
The credit ratings are given by several credit rating agencies and thus, each scale may vary slightly upon the factors taken into consideration and the range of the scale.
As general rule, most of the credit rating agencies use the A to D scale, as follows:
• AAA - awarded to borrowers with the lowest financial risks;
• AA – low expectation on financial risks;
• A – the expectations for risks are low, but the borrowers may be vulnerable to various economic conditions;
• BBB – moderate vulnerability to risk;
• BB – elevated vulnerability, especially if the economic environment is not very stable;
• B – default risks are present on the market, but the financial commitments taken by the borrower are still met;
• CCC – default risks;
• CC – the market encounters default risks;
• C – high levels of credit risks;
• RD – the credit risk is at high values, but the borrower has not entered into bankruptcy;
• D – the borrower entered into bankruptcy.