Moody’s withdraws domestic ratings in Russia

Russian Troika, a three-horse-drawn sledge, competes on the frozen Yenisei river 155 miles south of the Siberian city of Krasnoyarsk © Ilya Naymushin
The Moody’s ratings agency announced Friday it has officially stopped issuing local credit ratings for Russian companies. The change is ahead of new Russian legislation regulating the activities of ratings agencies that comes into effect in 2017.

The new regulations will force international rating agencies working in Russia to issue local data through a Russia-regulated subsidiary and guarantee they won't withdraw local credit ratings under outside political pressure.

Strains over Russian credit ratings increased last year after S&P and Moody’s downgraded the country below investment grade following the slump in crude prices and sanctions introduced over Ukraine.

Moscow felt the downgrades were the result of political pressure from Washington, as the three major international rating agencies: Moody's, Fitch and Standard & Poor’s, are US-based firms.

“This decision was taken in light of legislative changes and other potential restrictions applicable to the business of providing national scale ratings (NSRs) in Russia,” Moody's said in a statement last week.

Moody’s has ended its joint venture with Russian media company Interfax, saying the new law would limit the agency's operational independence.

The US-based firm said it would remain committed to retaining its strong local presence in Russia and will continue to provide Global Scale Ratings (GSR).

Earlier this year the Fitch ratings agency also announced plans to stop issuing local ratings on Russian companies. The company said the new rules make it very difficult to comply with European Union and US sanctions against Moscow.

Last year Russia launched a new national Analytical Credit Rating Agency (ACRA), seen as a domestic competitor to global ratings agencies. The agency plans to issue its first ratings this year, according to CEO, Ekaterina Trofimova.