Russian economy expected to grow 3.8% in 2021, ruble firm – rating agency director
* ACRA sees Russia’s GDP grow 3.8% in 2021
* ACRA expects ruble to strengthen in main storyline
* Head of ACRA: new sanctions not expected in the main scenario
* The sanctions would reduce the share of foreigners in OFZ bonds
MOSCOW, December 8 (Reuters) – Russia’s economy will grow 3.8% next year – the fastest growth since 2012 – and the ruble will strengthen, assuming no new Western sanctions are imposed on Moscow , said the director of the Russian rating agency ACRA. .
Russia’s economy is set to contract by around 4% this year, according to the central bank, hit by the COVID-19 pandemic, falling oil prices, Russia’s most lucrative export, and a headwind due to market fears of more Western sanctions.
“In our baseline scenario, we do not envision further sanctions against Russia, including restrictions on the purchase of public debt,” Mikhail Sukhov told Reuters in an interview.
Russia created ACRA in 2015 after economic and financial sanctions were imposed on Moscow for its role in the Ukraine crisis and annexation of Crimea, leading the world’s three major rating agencies to downgrade the rating. sovereign debt of Russia.
Major Russian banks, companies and pension funds hold equal shares in ACRA, which is also promoted by the government and the central bank.
Sukhov, a former deputy governor of the central bank, said ACRA’s baseline scenario is for foreign investors to maintain their share of OFZ treasury bills at their current levels of 27% to 30% in 2021.
Moscow is increasingly dependent on OFZ bonds as it uses them to plug holes in the budget created by declining export earnings and the need to increase state spending to fight the COVID pandemic -19.
ACRA has also crafted a more pessimistic scenario taking into account the possibility of further sanctions imposed on Russia’s new debt, Sukhov said.
In 2019, Washington imposed restrictions on U.S. banks buying sovereign Eurobonds directly from Russia, raising concerns in markets that tensions between Moscow and Washington could potentially trigger similar sanctions on OFZ bonds.
If this happens, the share of foreign investors in the OFZ market could fall to 17% -19%, leaving an additional OFZ supply in the market of around 1,000 billion rubles ($ 13.6 billion) and lowering OFZ prices up to 100 basis. points, according to Sukhov.
“Such an impact is not critical for the budget, it will digest this effect … Possible sanctions on the state debt will not have a serious impact on prices (in the longer term) if the we do not take into account an immediate adjustment if this risk were to occur, ”he said.
Sukhov said Russia’s creditworthiness was “quite strong” thanks to its low level of government debt, plentiful reserves and effective monetary policy.
Fitch Ratings, Moody’s and S&P Global Ratings gave Russia quality ratings, citing its fiscal and monetary policies that have helped Moscow borrow money from global markets by issuing Eurobonds this year and year. last.
Sukhov said ACRA expects the ruble, affected by the pandemic and related restrictions, to average 71 per dollar in its 2021 baseline scenario. On Monday, the ruble was at 73.55 per against the dollar.
At the corporate level, the coronavirus crisis this year led to 34 positive rating actions for ACRA clients and 27 negative actions, Sukhov said. Other customers have had their ratings confirmed.
ACRA, which had 250 clients in 2020, uses color-coded areas based on credit risk levels – green, yellow, and red.
IT and telecommunications companies as well as home builders entered the safer green zone this year, oil and gas companies and commercial real estate companies were in the yellow zone, while airline operators slipped into the yellow zone. red zone, Sukhov said. ($ 1 = 73.5856 rubles) (Reporting by Andrey Ostroukh and Katya Golubkova; Additional reporting by Darya Korsunskaya; Editing by Hugh Lawson)