Journal of Applied Economic Research
ISSN 2712-7435
The Probability of Sovereign Defaults In Russia in the International Ratings: Threats and Prospects
Ekimova N.A.
Abstract
Abstract. Credit ratings in the modern world are a significant tool of financial policy. From a formal point of view, they are no more than the opinion of rating agencies about the creditworthiness of the issuer which helps market participants to make informed financial decisions. In reality, their impact on investment policies of large investors is so great that the consequences of their poor ratings may affect the economy of entire countries. How accurate and substantiated are credit ratings? What "disease" they are exposed to? Why are low sovereign ratings dangerous for countries? In the paper an attempt is made to find answers to these questions. Another aspect of the research is devoted to the market of credit rating agencies, which is currently almost an oligopoly of three major credit rating companies, the so-called "big three: Fitch, Standards&Poors, and Moody's. In their opinion, the best ratings in the world have countries like Norway, Switzerland, Australia, Luxembourg, Germany. The worst performing are Venezuela, Greece, Puerto Rico, and Ukraine. These rating agencies have been assigning a sovereign rating to Russia since 1996. Since 2003 the national credit rating of the Russian Federation was considered investment grade. Currently, only Fitch maintains the ranking of Russia's bonds at the investment level, while the other two agencies have downgraded Russia to "junk. What underlies this decision? Why does it bear a threat to our country? What should be the response? The analysis allows us to evaluate the significance of credit ratings and the possible consequences of changes in them, and to identify the shortcomings of the rating agencies and the credit ratings.
Keywords
Key words: credit rating; creditworthiness; public debt; risk; sovereign default.
About Authors
DOI: http://dx.doi.org/10.15826/vestnik.2016.15.5.35
Download full text article:
~532 KB, *.pdf
(Uploaded
02.11.2016)
Created / Updated: 23 September 2021 / 23 September 2021
© Federal State Autonomous Educational Institution of Higher Education «Ural Federal University named after the first President of Russia B.N.Yeltsin»
Remarks?
select the text and press:
Ctrl + Enter
Portal design: Artsofte
Contact us
Rector's Office
Rector, Dr. Victor Koksharov
Tel. +7 (343) 375-45-03, e-mail: rector@urfu.ru
Vice-Rector for International Relations, Dr. Maxim Khomyakov
Tel. +7 (343) 375-46-27, e-mail: Maksim.Khomyakov@urfu.ru