The Russian bond market suffered last year from the same news-driven volatility that affected the stock market but bounced back after Russia scored a hat trick of investment grades, when Standard & Poor’s (S&P) decided to upgrade the country in February – the last of the three big ratings agencies to do so. Concern about growing political risks remains but Russia’s sparkling public finances forced the agency’s hand. Provided there are no more politically motivated attacks on big companies, bond investors are looking forward to a bumper year.
After last year’s appalling press generated by the de facto nationalisation of oil major Yukos, president Vladimir Putin must have been blessing S&P for starting 2005 on a better footing. Bond markets had already reacted well to the news that Lehman Brothers had included Russia in its US credit index, and S&P added to the good news by marking Russia up to BBB shortly afterwards. Moody’s awarded Russia an investment grade in 2003 (and was roundly criticised for jumping the gun) and Fitch followed suit in November 2004.
