Russia's credit rating upgraded by Fitch with stable outlook

[MOSCOW] Russia's credit rating was lifted on Friday by Fitch Ratings, which cited strong fiscal policies and a commitment to inflation-targeting.

The sovereign rating was lifted to "BBB", the second lowest investment grade, with a stable outlook, Fitch said in a statement.

The nation's credit score is now on a par with that of Kazakhstan, Italy and Mexico.

Last month, S&P Global Ratings affirmed Russia's rating at "BBB-" with a stable outlook.

"Russia has entrenched a credible and consistent policy framework that will deliver improved macroeconomic stability, reduce the impact of oil price volatility on the economy, and support increased resilience to external shocks," analysts Erich Arispe and Paul Gamble said in the statement.

Fitch said that the continued risk of sanctions escalation will weigh on Russia's external financing flexibility, investment and growth prospects. Five years under sanctions that limit Russia's access to international capital markets have forced the nation's policy makers to increase rainy-day funds and maintain tight monetary policy. Last year's budget surplus was the widest in a decade and reserves recently topped US$500 billion.

The US introduced additional sanctions against Russia last week, banning US banks from buying new issues of non-ruble Eurobonds but leaving the much-larger market for ruble securities untouched.

While the International Monetary Fund estimated previous sanctions have chipped 0.2 percentage points off Russia's annual growth since 2014, the new measures may have limited impact since the finance ministry doesn't urgently need to borrow internationally.

BLOOMBERG