The ratings game

摘要

Ratings agency Standard and Poor's (S&P) surprised investors by upgrading Russia's credit rating at the end of January to one notch below the sought-after investment grade. The country's rating has been increased seven or eight times since the 1998 financial crisis, when it earned a "selective default" label - the lowest rung on the ladder. The market is expecting the agencies to hike the ratings the last notch sometime after the presidential elections in March and so to open the door to a whole new class of capital. But analysts still cannot agree if Russia is ready to receive this badge of respectability. Bond traders, however, have already made up their minds and Russian fixed income instruments have been priced as if the country had been investment grade since last year: Russian Eurobonds enjoy tighter spreads over US treasuries than Mexico, which was awarded an investment grade several years ago.