S&P upgraded Russia's rating to investment grade. Credit rating of countries of the world and the Russian Federation Rating scale s p

The credit rating of countries assesses the ability of the state to fulfill its loan obligations within the prescribed period. The calculation takes into account past and present credit history, financial indicators, and evaluates existing assets and liabilities (the total amount of debt on loans). The value also helps determine investment risks.

The concept of a country's credit rating

In general, the concept and purpose of determining the position of a specific country is the same as when a bank evaluates a potential borrower. But the designation of a state’s credit rating is broader and more complex. This calculation of investment risks into infrastructure, the direction of changes in financial condition. Based on this indicator, the country’s ability to pay off its loan obligations is assessed. The assessment of financing risk based on the rating is relative, but affects the interest rate, credit limit and profitability of loan obligations.

The higher the value, the lower the risks, therefore, the lower the interest rate, the larger the loan amount.

Credit ratings are compiled by specialized commercial companies that monitor and analyze the solvency of countries. Such organizations are called rating agencies. Their activity is to evaluate banks, corporations, financial companies and countries.

• Standard & Poor's (S&P);
• Fitch;
• Moody's.

The Russian Federation has its own agencies - Expert RA, AK&M and the National Rating Agency.

The first analytical companies were registered in the USA at the beginning of the twentieth century. Initially, they were engaged in compiling ratings of national companies, but after the recognition of the ratings they moved to the international level. Such organizations monitor the financial and industrial markets, as well as individual sectors of the economy of different countries.

Rules for assigning ratings to countries

1. Political situation;
2. Economic indicators;
3. Monetary relations;
4. Financial loyalty.

When monitoring the political situation, the following are assessed:

• Competence and stability of government bodies;
• Participation of society in government;
• Transparency of financial policy;
• Geopolitical relations.

The level of the economy depends on the stability of banking organizations, healthy competition, orientation towards market relations, the size of GDP, and prospects for improving the economy.

In monetary policy, the independence of the national bank, currency stability, inflation, and credit policy are of decisive importance.

Financial transparency is assessed based on the state's pension obligations, government expenditures, budget policy and financial reporting.

Explanation of symbols

The credit rating is presented in the form of a table in which a letter code is used to indicate the level of solvency of the state. These may vary depending on the compiling agency, but in most cases a state is assigned a score of AAA to D.

AAA is considered the highest. It means that the country’s risks of non-repayment of loan obligations are minimal. Level D indicates default - bankruptcy of the state, and, consequently, the inability to pay off loan obligations.

Loans at the AAA and BBB levels (some agencies use the code Baa) are called investment loans, below BBB - speculative, the risks of non-repayment are very high. This rating discourages foreign investors from creating a business in the country, and also complicates state companies the process of obtaining a loan from foreign banks.

1. positive – likely an increase in grade;
2. negative – decrease;
3. stable – the likelihood of change is minimal;
4. developing - likely both an improvement and a decrease in financial performance.

Positive ratings

Average ratings

Below average grades

Negative ratings

Credit ratings of different countries

According to estimates by Standard & Poor’s, Moody’s and Fitch, the following countries have the highest indicators:

• Germany;
• Norway;
• Switzerland;
• Australia.

Below position B were Mozambique, Barbados and Venezuela.

Behind Last year Standard & Poor’s agency reduced the indicators of 9 EU countries, as a result:

• France lost its high AAA score and received an AA+ and a negative outlook.
• Austria moved from AAA to AA+ and received a stable outlook.
• Holland, Finland, Luxembourg and Germany managed to maintain their positions at the AAA level, but the outlook for all countries except Germany is negative.
• Portugal and Cyprus lost significant value and dropped to BB position with a negative outlook.
• Spain has dropped to level A (negative outlook).
• Italy and Ireland – BBB+ with a negative outlook.

Credit rating of the Russian Federation

The Russian Federation received its first rating from Standard & Poor’s in 1996 - level BB with increased investment risk. Two years later it fell to B+, and after the default in 1998 it dropped to B-. In 1999 the value dropped to the critical SD - pre-default state.

The growth of Russia’s indicators began at the end of the 2000s, and in 2005 Standard & Poor’s first established a BBB position for the Russian Federation. Russia remained at this level until the global economic crisis of 2008–2009. After the deterioration of relations with Ukraine in 2014, the forecast became negative, and in 2015 the assessment lost another position and settled at BB+ with a negative forecast. In 2016 it became stable.

Last year, 2017, the agency, leaving the rating at BB+, increased its investment attractiveness Russian Federation, assigning a positive outlook. Fitch, in turn, assesses the Russian Federation at BBB- with a negative outlook, Moody’s at Ba1 (stability).

Most experts agree that the fight against inflation in the Russian Federation has increased. The priority given to the raw materials sector of the economy and the high level of corruption have a negative impact on the investment attractiveness of the country.

As S&P noted in its ratings commentary, Russia has demonstrated a commitment to conservative macroeconomic policies that are likely to “maintain strong external and fiscal balance sheets.” “A flexible exchange rate will allow the economy to cope with shocks that may be caused by tightening sanctions and lower commodity prices,” the agency believes.

“The rating action reflects prudent policies that have allowed the Russian economy to adjust to lower commodity prices and international sanctions,” S&P said in a release. In addition, the agency noted the actions of the Bank of Russia, which, despite the cleansing of the banking system, made it possible to maintain financial stability.

Economic problems have not gone away

However, one should not delude oneself: the Russian sovereign rating, according to S&P, has only become equal to the ratings of Kazakhstan, India and Indonesia, and S&P is extremely cautious in assessing Russian economic prospects. The agency forecasts low economic growth rates (1.7-1.8% until 2021, while the Russian government expects growth faster than 2%) against the backdrop of unfavorable demographics (aging population, declining working-age population) and weak labor productivity. Structural barriers to productive growth include "the dominant role of the state in the economy, a challenging investment climate and relatively low levels of competition and innovation," S&P said.

At the same time, the agency highlights Russia's jump in the World Bank's Doing Business ranking from 120th position a few years ago to 35th, as well as Russian government initiatives to increase productivity and investment.

Fitch, in turn, notes “a strong sovereign balance sheet, reliable external factors and improved economic policies in relation to macroeconomic indicators.” At the same time, the agency points to “structural weaknesses (dependence on commodities and governance risks), as well as geopolitical contradictions.” Fitch forecasts economic growth to average 2% in 2018-2019 amid reduced uncertainty, easing monetary policy and stable oil prices. Average economic growth for the BBB investment category is 3.1%.

What will happen after the presidential elections?

S&P also touches on political issues in its comments. High approval ratings from the authorities could allow the state to make unpopular reforms, the agency believes, but does not believe in the reality of such a choice. The Russian authorities have talked a lot before, for example, about privatization and demonopolization of the economy, but deeds did not match the words, writes S&P, not expecting a significant reduction in the role of the state in the economy. “Russia has a weak system of checks and balances between institutions and high centralization of power. We have seen this with recent restrictions on independent media and increased barriers to genuine political participation,” S&P said. And it warns that while macroeconomic stability is likely to continue after the March 2018 presidential elections, “the uncertainty surrounding the future transition of power may adversely affect the predictability of policy priorities.” ​

Fitch also notes uncertainty about the “main elements and timing of the broader reform agenda” following the presidential election. “President Vladimir Putin is on track to win the presidential election again in March 2018,” the agency points out.

Senior Emerging Markets Analyst management company Manulife Asset Management Richard Segal told RBC on the eve of the S&P decision that in Russia’s favor are stabilization of economic growth, low inflation, a reduction in the budget deficit and that “the economy has become more flexible thanks to the depreciation of the ruble and the introduction of a new, clearer budget rule.” Factors playing against Russia include limited economic growth potential, problems and risks in the banking sector, about 70% of which is again controlled by the state, shortcomings in corporate governance (a recent example is ) and the uncertainty of the political landscape in the next three years, Segal said.

Inflow into Russian securities

Russia's return to the investment rating category means that Russian sovereign Eurobonds will be able to return to global debt indices such as the Bloomberg Barclays Global Aggregate. In February 2015, Barclays removed Russian external debt from its family of indices, causing those institutional investors who follow the indices to lose the ability to buy or hold Russian Eurobonds. S&P’s decision “will allow for greater participation in the Russian debt market by such conservative institutional investors as foreign pension funds and Insurance companies"said Finance Minister Anton Siluanov.

Currently, about a third of Russian government securities (both ruble OFZs and Eurobonds) belong to foreign investors. Societe Generale estimated that raising the Russian rating to investment grade could cause an influx of $1-2 billion into Russian Eurobonds, Bloomberg reported.

Credit rating represents an independent and reliable assessment of an issuer's creditworthiness, on the basis of which market participants can make informed financial decisions. This may entail a reduction in the issuer's costs of raising borrowed funds. For those issuers that raise funds against third-party guarantees, a credit rating may reduce the cost of such a guarantee or raise funds more efficiently without purchasing a guarantee.

In recent decades, credit ratings have become a generally accepted and convenient guide for determining the degree of creditworthiness of federal governments, regional administrations, banks, and non-financial companies. An objective assessment of the solvency of economic entities by independent experts is in modern business practice the same necessary element of business and public administration as regular audits.

Credit ratings are often used by banks and other financial intermediaries to make decisions on lending, money market transactions, insurance, leasing, and any other situation where an assessment of the creditworthiness of a business partner is required. Many companies choose not to disclose their financial information during business negotiations. In this case, the issuer's credit rating serves as a reliable guide to creditworthiness.

Credit rating- one of the most important tools for increasing the attractiveness of borrowers in the eyes of lenders, allowing them to obtain an objective and understandable indicator of the financial condition of borrowers. The independence of the rating agency from financial market participants contributes to increasing confidence in the borrower.

A credit score facilitates the underwriting process. Investment banks and other financial intermediaries active in the bond market may use credit ratings when planning and placing bond issues.

Principles for providing rating services

Independence: A credit rating is a rating company's independent opinion of the issuer's creditworthiness. The independence of Standard & Poor’s opinion from the interests of any market participants, government and commercial organizations is one of the most important guarantees of the objectivity and impartiality of creditworthiness assessments. Along with the high quality of analytics, independence determines the accuracy of Standard & Poor’s credit ratings.

Publicity of analytical criteria: a critical practice that provides investors with a comprehensive understanding of Standard & Poor's analytical approaches to risk assessment. All Standard & Poor’s criteria are available in various languages, including Russian, and are posted on the Standard & Poor’s website.

Collegiality: a decision-making procedure that eliminates any possibility of manipulating the opinions of analysts responsible for analyzing a particular issuer. The rating committee is the most important mechanism in the process of assigning a credit rating, guaranteeing the impartiality of analysts’ assessments, quality control and the futility of putting pressure on analysts’ opinions from outside. The rating committee is formed from specialized specialists depending on the industry and other features 5-9 of the issuer. The task of the rating committee includes a detailed discussion of the rating report for a given issuer and assignment of a rating at a certain level through voting.

Interactivity: the principle on which interaction with the issuer is based in the process of assigning a credit rating and subsequent monitoring of it. Based primarily on information received from the issuer itself, a painstaking, detailed discussion of all possible situations that could affect its creditworthiness. Interactivity implies regular meetings with the issuer's management and constant information contact, allowing you to quickly respond to changes.

Confidentiality of information: a fundamental operating condition that allows the issuer to guarantee non-disclosure of confidential information transferred to analysts and the publication of the rating only with the consent of the issuer.

Using rating scales: The scale allows you to compare issuers of different economic natures (corporations, regions, municipalities, banks, insurance companies, etc.) by the amount of credit risk, taking the issuer and its obligations beyond the narrow industry context.

Ongoing research into the probability of default: are carried out on the basis of a wide statistical sample across all rating categories to control the quality of the rating opinion and (if necessary) adjust the methodology.

Rating agencies

Moody's Interfax Rating Agency

Moody's Interfax Rating Agency is a universal rating agency that provides a full range of rating services for all sectors of the economy.

Aaa.ru- issuers, or debt obligations rated Aaa.ru, are characterized by the highest creditworthiness in relation to other issuers in the country.

Aa.ru- issuers, or debt obligations rated Aa.ru, are characterized by very high creditworthiness in relation to other issuers in the country.

A.ru- issuers, or debt obligations rated A.ru, have a level of creditworthiness above average among other issuers in the country.

Baa.ru- issuers, or debt obligations rated Baa.ru, represent the average level of creditworthiness among issuers in the country.

Ba.ru- issuers, or debt obligations rated by Ba.ru, have a level of creditworthiness below the average for issuers in the country.

B.ru- issuers or debt obligations rated B.ru have low creditworthiness relative to other issuers in the country.

Caa.ru- issuers, or debt obligations rated by Caa.ru, are characterized as speculative and have very low creditworthiness relative to other issuers in the country.

Ca.ru- issuers, or debt obligations rated by Ca.ru, are characterized as highly speculative and have extremely low creditworthiness relative to other issuers in the country.

C.ru- issuers, or debt obligations rated C.ru, are characterized as highly speculative and have the lowest creditworthiness relative to other issuers in the country.

Moody's Interfax Rating Agency supplements the ratings of each category from Aa before Caa indexes 1, 2 and 3. Index 1 indicates that the obligation has a higher rank in its rating category; index 2 indicates average rank and index 3 indicates lower rank in that category.

Standard & Poor's

Issuer's credit rating according to the international scale Standard & Poor's expresses a current opinion about the overall creditworthiness of the debt issuer, guarantor or guarantor, business partner, its ability and intention to timely and fully fulfill its debt obligations.

The credit rating of debt obligations on the Standard & Poor’s international scale expresses the current opinion on the credit risk of specific debt obligations (bonds, bank loans, loans, and other financial instruments).

Credit ratings on the Standard & Poor’s international scale include a long-term rating, which assesses the issuer’s ability to timely fulfill its debt obligations. Long-term ratings range from the highest, AAA, to the lowest, D. Ratings in the range from “AA” to “CCC” can be supplemented with a “plus” (+) or “minus” (-) sign, indicating intermediate rating categories in relation to the main categories.

A short-term rating is an assessment of the likelihood of timely repayment of obligations considered short-term in the relevant markets. Short-term ratings also range from 'A-1' for the highest quality obligations to 'D' for the lowest quality obligations. Ratings within the A-1 category may contain a plus sign (+) to highlight stronger obligations within that category.

In addition to long-term ratings, Standard & Poor's has specific ratings for preferred stocks, money market funds, mutual bond funds, insurance company solvency, and derivatives companies.

AAA— very high ability to timely and completely fulfill your debt obligations; highest rating.

AA— high ability to timely and completely fulfill your debt obligations.

A- moderately high ability to timely and fully fulfill its debt obligations, but greater sensitivity to the effects of adverse changes in commercial, financial and economic conditions.

BBB- sufficient ability to timely and fully fulfill its debt obligations, but higher sensitivity to the effects of adverse changes in commercial, financial and economic conditions.

BB- not at risk in the short term, but greater sensitivity to the effects of adverse changes in commercial, financial and economic conditions.

B- higher vulnerability in the presence of unfavorable commercial, financial and economic conditions, but currently it is possible to fulfill debt obligations on time and in full.

CCC— at the moment there is a potential possibility of the issuer failing to fulfill its debt obligations; Timely fulfillment of debt obligations is largely dependent on favorable commercial, financial and economic conditions.

CC— there is currently a high probability that the issuer will fail to fulfill its debt obligations.

C— bankruptcy proceedings have been initiated against the issuer or a similar action has been taken, but payments or fulfillment of debt obligations continue.

SD— selective default on a given debt obligation while continuing to make timely and full payments on other debt obligations.

D- default on debt obligations.

Stable - change is unlikely.

Developing - possible increase or decrease in rating.

You can also determine the credit rating of the issuer according to the Russian Standard & Poor's scale. Russian issuers mean all issuers of debt obligations, guarantors and guarantors, insurance companies located on the territory of the Russian Federation or operating on Russian financial markets. The business partner rating is a type of credit rating issuer.

An issuer's credit rating is not equivalent to the rating of its specific debt obligations, since it does not take into account the nature and security of the specific obligation, as well as its relative status in the event of bankruptcy or liquidation of the issuer and the protection of the rights of creditors thereunder. The creditworthiness of guarantors, or guarantors, for specific obligations of the issuer, as well as other forms of credit risk mitigation, may serve as the basis for increasing the credit rating of the obligation compared to the credit rating of the issuer.

The issuer's credit rating is not a recommendation as to whether to sell or buy the issuer's debt obligations, nor is it an opinion on the market price of debt obligations or the investment attractiveness of the issuer for a particular investor. A credit rating is based on current information obtained from the issuer or from other sources Standard & Poor's considers to be reliable. Standard & Poor's does not perform an audit in connection with any credit rating and may sometimes rely on unaudited financial information. An issuer's credit rating may be changed, suspended or withdrawn as a result of any changes in information or lack of such information or for other reasons.

Issuer credit rating:

ruAAA. The “ruAAA” issuer rating means the issuer’s very high ability to timely and fully fulfill its debt obligations relative to other Russian issuers. This is the highest credit rating on the Russian Standard & Poor's scale.

ruA. An issuer rated 'ruA' is more susceptible to adverse changes in commercial, financial and economic conditions than issuers rated 'ruAAA' and 'ruAA'. Nevertheless, the issuer is characterized by a moderately high ability to timely and fully fulfill its debt obligations relative to other Russian issuers.

ruBBB. The “ruBBB” issuer rating reflects the issuer’s sufficient ability to timely and fully fulfill its debt obligations relative to other Russian issuers. However, this issuer has a higher sensitivity to the impact of adverse changes in business, financial and economic conditions than issuers with higher ratings.

ruBB, ruB, ruCCC, ruCC. Issuers with ratings of “ruBB”, “ruB”, “ruCCC” and “ruCC” on the Russian Standard & Poor's scale are characterized by high credit risk relative to other Russian issuers. Despite the fact that such issuers have a certain degree of reliability, they are more are subject to uncertainty and the influence of unfavorable factors compared to other Russian issuers.

ruBB. An issuer with a 'ruBB' rating is characterized by lower credit risk than Russian issuers with lower ratings. However, uncertainty or the impact of adverse changes in business, financial and economic conditions may result in the issuer's insufficient ability to meet its debt obligations in a timely and complete manner.

ruB. The 'ruB' issuer rating reflects lower creditworthiness compared to the 'ruBB' rating. Currently, this issuer is able to fulfill its debt obligations on time and in full. However, adverse changes in commercial, financial and economic conditions are likely to prevent the issuer from meeting its debt obligations on time and in full.

ruCCC. The issuer rating of “ruCCC” means that at the moment, in the conditions of the Russian financial market, there is a potential possibility of default on its debt obligations. The timely fulfillment of debt obligations is largely dependent on favorable commercial, financial and economic conditions.

ruC. The issuer rating “ruС” is assigned when bankruptcy proceedings have been initiated against the issuer, a ban on carrying out its core activities has been imposed, a court decision on the imposition of foreclosure on property is expected, or in another similar case. During the trial (or external management), the relevant authority may decide to repay part of the debt obligations and default on the remaining obligations. Standard & Poor's Debt Credit Rating Guide provides a more detailed explanation of the potential impact of these types of decisions on the credit rating of specific debt obligations.

Rating "ruSD" in the conditions of the Russian financial market, assigned when Standard & Poor's believes that the issuer has defaulted on a specific issue or several issues of its debt obligations, but will continue to make timely and full payments on other debt obligations. In the description of the credit rating of debt obligations Standard & Poor "s provides a more detailed explanation of the possible impact of these types of decisions on the credit rating of specific debt obligations.

Specialized ratings Standard & Poor's assign to certain types of debt obligations, bank loans, investment projects and private placements valuable papers, using the same scale as for other debt instruments. Private placement ratings include an assessment of the guarantees and collateral required to reduce the risk of loss in the event of default. Bank loan ratings serve the needs of the syndicated loan and project finance markets and provide an assessment of a lender's prospects for recovery in the event of default, based on an analysis of the value of collateral or other protective mechanisms typically included in such arrangements.

Bank loans, private placements and other financial instruments, such as guaranteed bonds, may receive a higher rating than the issuer's rating when they are well protected and adequately compensate the lender. In contrast, instruments that are inferior in repayment priority to the issuer's principal generally have a lower rating than the issuer's rating.

Many mutual fund managers use Standard & Poor's ratings for the funds they manage to highlight the strengths of their bond and cash funds relative to their competitors. The ratings provide investors with information about the funds' creditworthiness and the quality of their management.

• the quality of the assets being securitized;
• payment structures;
• legal purity of transactions.

The use of structured instruments makes it possible to reduce credit risks by removing securitized assets from the issuer’s balance sheet.

The priority of tranches when issuing structured instruments allows obligations to be issued with a credit quality higher than the credit quality of the securitized assets.

Indicators of the health of stock markets are Standard & Poor's indices, used by investors around the world to evaluate the performance of investments and as a basis for a wide range of financial instruments, such as index funds, deposit products, futures, options and exchange-traded funds ( ETFs). The S&P 500 index includes 500 companies - leaders of the leading sectors of the American economy and covers more than 80% of the shares of American companies. The S&P Global 1200 Index covers approximately 70% of the world's capital markets and includes the seven most widely used indices, many of which are leaders in their regions. Standard & Poor's indices are created as investment portfolio indices that are broadly representative of the market while still having practical relevance to investors.

Fitch Ratings

Ratings Fitch Ratings represent opinions regarding the ability of issuers to timely meet their financial obligations or the timely repayment of securities issues, including obligations such as interest payments, preferred stock dividends or payments of principal. Ratings may be assigned to a wide range of issuers and securities, including sovereigns, governments, structured finance instruments and corporate issuers; debt obligations, preferred shares, bank loans and counterparties. Ratings can also assess the financial strength of insurance companies and financial guarantors.

Credit ratings are used by investors as indicators of the likelihood that payments will be made in accordance with the terms under which the investment was made. Thus, the use of credit ratings determines their function: investment grade ratings (international long-term "AAA" - "BBB"; short-term "F1" - "F3") denote a relatively low probability of default, while speculative, or non-investment grade, ratings ( Sub-investment category (international long-term "BB" - "D"; short-term "B" - "D") may indicate a higher probability of default or that a default has already occurred.

The ratings are not predictive of the likelihood of default, but it should be noted that over the long term, the default rate for US corporate bonds rated 'AAA' has averaged less than 0.10% per year, while the default rate for bonds rated "BBB" reached 0.35%, and bonds rated "B" - 3.0%.

Issuers or issues of securities rated at the same level have similar, but not necessarily identical, creditworthiness because the rating categories do not fully reflect subtle differences in credit risk.

Fitch Ratings' credit ratings and research are not recommendations to buy, sell, or hold any security. Ratings do not constitute commentary on the adequacy of market price, the suitability of any security for any particular investor, or the application of tax exemptions or tax treatment to any payments made in respect to any security.

The ratings are based on information obtained directly from issuers, other obligors, underwriters, their experts and other sources Fitch believes to be reliable. Fitch does not audit or verify the accuracy or accuracy of such information. Ratings may be changed or withdrawn as a result of changes or unavailability of information or other reasons.

Ratings assigned to equity programs relate only to standard issues within a particular program. These ratings do not apply to all releases within the program. In particular, for non-standard issues, i.e. those related to third party loans or index performance, their ratings may differ from the rating of the corresponding program.

Credit ratings do not directly assess any risks, with the exception of credit risks. In particular, these ratings do not address the risk of loss due to changes in interest rates or other market factors.

Individual ratings assigned only to banks. The purpose of these internationally comparable ratings is to evaluate the bank if it were completely independent and could not rely on external support. These ratings assess a bank's risk exposure, risk appetite and risk management and thus represent the agency's view of the likelihood of the bank encountering significant difficulties such that the bank would require support.

The main factors that the agency analyzes when assessing a bank and determining the level of this rating include profitability and balance sheet integrity (including capitalization), customer base and management, operating environment and development prospects. Finally, an important factor is the consistency of policies and the size of the bank (volume of own funds) and diversification (scale of activity in different sectors of the economy and geographical coverage).

An exceptionally stable bank. Characteristics of such a bank may include exceptionally high profitability and balance sheet integrity, a very large customer base and high quality management, and an exceptionally favorable operating environment and development prospects.

A stable bank with no significant concerns. Characteristics of such a bank may include high profitability and balance sheet integrity, a large customer base and high quality management, a favorable operating environment and development prospects.

A bank with adequate strength, but at the same time characterized by one or more factors that cause concern. There may be concerns about the profitability and balance sheet integrity of such a bank, the size of its customer base and quality of management, operating environment or development prospects.

A bank that is characterized by certain shortcomings, both internal and associated with external factors. There are concerns about its profitability and balance sheet integrity, customer base and quality of management, operating environment or growth prospects. Banks operating in emerging economies inevitably face a greater number of potential weaknesses due to external factors.

A bank experiencing very serious difficulties and which already requires, or is likely to require, external support.

What is a credit rating of an individual is clear. This is to repay loans received from banking organizations. This indicator is calculated by banks to determine the feasibility of providing a loan to a specific person.

If we scale it up, we get a business credit rating. It will be of interest to both partner companies and investors.

What is a country's credit rating?

The same concept has a much greater information load when applied to a more complex economic organization such as a country. Credit cards reflect the risk of investments in the state infrastructure. Based on this indicator, we can draw conclusions about whether the state will be able to respond to its own Investors, when making decisions on large investments in enterprises or industries, must take into account the current values ​​of the credit rating.

But at the same time, this is essentially a forecast. It does not provide one hundred percent guarantees of return on investment, and therefore cannot be an absolute indicator of reliability. When making investment decisions, the credit rating of countries should be considered in conjunction with other factors that confirm the advisability of such investments.

Who has the authority to determine credit ratings?

The indicators we study can be national And international. The first ones are determined by national ones. In Russia these are “Rus-Rating”, “Expert RA”, “National Rating Agency” and others, in Ukraine - “Credit Rating” and “Standard Rating”. They have authority only within their own country.

Data from international rating companies are much more credible:

• Moody's.
• Standard & Poor's (S&P).
• Fitch.

They were created in the United States at the beginning of the last century, but received worldwide recognition and reached the international level.

These organizations determine international credit ratings of countries, industries, enterprises, banking organizations, issue related forecasts, and also analyze financial markets.

Credit rating designation

Each rating agency has defined its own designation scale. The meaning of the main concept has a letter definition, and intermediate categories on the S&P and Fitch scales are distinguished by the signs “+” and “-”, which in meaning are not much different from the numbers on the Moody's scale.

What is a forecast from a rating agency?

- Positive outlook- means that the rating is likely to increase in the near future.

- Stable- does not foretell changes.

- Negative- likely downgrade of credit rating.

In the case where there is an equal probability of both a decrease and an increase in the indicator, determine developing forecast.

How has the credit rating of Ukraine and Russia changed over the past year?

In 2014-2015, events occur in these countries that provoke a decrease in the indicator in question. And the first consequences are already noticeable.

The credit rating of the Russian Federation was downgraded by Moody's from Baa1 to Baa2 at the end of 2014. In addition, there is a possibility of a further downgrade - the forecast is negative. Standard & Poor's also downgraded from BBB- to BB+ in foreign, and from BBB to BBB- in national currency. At the beginning of 2015, Fitch made a completely predicted decline from BBB to BBB - all with the same negative forecast.

Ukraine, according to international rating agencies, is in a pre-default state. At the beginning of 2015, Fitch assigned it an SS value with a negative trend. Ukraine’s foreign currency credit rating, according to Standard & Poor’s, was downgraded from CCC to CCC- at the end of 2014.

Can rating agencies be trusted?

In times of rampant corruption at all levels, the question arises: “How accurate are the data from rating organizations? Can they be trusted?” Indeed, a “twisted” credit rating of countries can greatly influence the situation in the field of global investment and direct large investment flows in the wrong direction. If the rating data used by the investor side is false, then this calls into question the relevance of the investment and sooner or later will be reflected in the profit.

The above-mentioned rating agencies have worked hard over the years to earn global credibility and trust. Now their job is to provide as truthful and up-to-date information as possible to maintain their status. The assigned ratings cannot be falsified in any way, so they can be used as reliable for market analysis.

And Fitch Rating dates back to 1860. They have rated more than 100 countries with a total debt of US$34 trillion. In addition, the company is the creator of a series of S&P stock indices for the American and international securities markets. It has 6,300 employees.

Investment grade.

“AAA” – very high ability to timely and completely fulfill one’s debt obligations; highest rating.

“AA” – high ability to timely and completely fulfill one’s debt obligations.

“A” – Moderately high ability to meet debt obligations on time and in full, with high sensitivity to the effects of adverse changes in commercial, financial and economic conditions.

"BBB" - reasonable ability to meet debt obligations on time and in full, but there is greater sensitivity to the effects of adverse changes in business, financial and economic conditions.

Speculative class.

"BB" - safe in the short term, but more sensitive to the impact of adverse changes in commercial, financial and economic conditions.

“B” – higher vulnerability in the presence of unfavorable commercial, financial and economic conditions, but currently it is possible to fulfill debt obligations on time and in full.

“CCC” – there is currently a potential for the issuer to default on its debt obligations – this is largely dependent on favorable commercial, financial and economic conditions.

“CC” – currently there is a high probability that the issuer will not fulfill its debt obligations.

“C” – bankruptcy proceedings have been initiated against the issuer or a similar action has been taken, but payments or fulfillment of debt obligations continue.

“SD” is a selective default on a given debt obligation while continuing to make timely and full payments on other debt obligations.

“D” – default on debt obligations.

• “positive” – the rating may increase;
• “negative” – the rating may decrease;
• “stable” – change is unlikely;
• “developing” – both an increase and a decrease in the rating are possible.

The S&P national rating scale uses the prefix ru: “ruAAA”, “ruAA”, “ruA” and so on. The company's rating cannot be higher than the sovereign rating. Therefore, in the description of each class it is added that the rating indicates the company's ability to pay its debt relative to other issuers.

In addition to credit ratings, S&P evaluates company management. For this purpose, the agency has developed two systems: “Corporate Governance Rating” and GAMMA - an assessment of non-financial risks associated with the purchase of shares of companies in emerging markets.