February 6, 2017 / 4:47 PM / 8 months ago

Russia rating to stay in junk for 'for a year or two at least' - S&P

FILE PHOTO: A shop assistant (L) counts Russian rouble banknotes as customers gather at a store selling Apple products during the launch of the new iPhone 7 sales at the State Department Store, GUM, in central Moscow, Russia, September 23, 2016. REUTERS/Sergei Karpukhin/File Photo

LONDON (Reuters) - Russia’s sovereign credit rating will likely remain in junk territory for “a year or two at least”, the S&P Global agency said on Monday.

The agency rates Russia at BB+, one notch below investment-grade, with a stable outlook.

“We think the rating will remain for a year or two, at least, in the non-investment grade world,” Moritz Kraemer, S&P’s head of sovereign ratings, told Reuters.

“Russia has the long-entrenched problem of a lack of economic dynamism and diversification. It also has a shrinking population which makes the growth potential even less and what has saved the fiscal account recently is a more substantial recovery of the oil price.”

Russian assets have rallied in recent months on expectations that President Donald Trump, who has pledged to improve ties with Russia’s Vladimir Putin, will roll back at least some of the sanctions imposed after the Kremlin’s 2014 annexation of Ukraine’s Crimea region.

But Kraemer said “it was too early to tell” how the sanctions issue would pan out, and did not see it having a major impact on the rating.

“It (the U.S.) is not that critical economically (for Russia) as it would be if the EU changed its sanctions regime on Russia because trade is just much larger with the EU,” Kraemer added.

Reporting by John Geddie; editing by Sujata Rao

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