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JPMorgan Is Hired by Russia to Promote Sovereign Credit Rating
JPMorgan was chosen after beating proposals from other investment banks, the ministry said in a statement on its website, without naming the other firms. Natalia Shchetinina, a JPMorgan spokeswoman in Moscow, declined to comment.
Russia has long complained of bias by the three U.S. rating companies that dominate the industry. President Vladimir Putin said in 2011 the rankings given to Russia were an “outrage” that increased borrowing costs for domestic companies and the government. The country has “more than earned” an upgrade, Deputy Finance Minister Sergei Storchak said in June.
The world’s largest energy exporter last had its debt score changed by one of the three U.S. companies in February 2009, when Fitch Ratings cut it one level to BBB, three steps below A and two above junk. That came three months after Standard & Poor’s did the same. Moody’s Investors Service has held Russia at Baa1, the third-lowest investment grade, since July 2008.
S&P and Moody’s have said Russia’s reliance on oil revenue, which makes the budget vulnerable to swings in commodity prices, outweighs the low level of sovereign debt. Russia plans to follow last year’s sale of $7 billion in euro bonds with another offering of the same amount in 2013.
Goldman Sachs Group Inc. said in February it had been hired by the government to burnish Russia’s image overseas and attract institutional investors. The New York-based bank signed a three-year agreement with the Economy Ministry and the Russian Direct Investment Fund to advise on issues such as communicating government decisions and setting up meetings with investors, according to Sergei Arsenyev, Goldman Sachs’s managing director of investment banking in Moscow.
Goldman Sachs and New York-based JPMorgan are on a list of 23 foreign and domestic banks selected to advise Russia on its 1 trillion-ruble ($33 billion) privatization program. Last year both American investment banks helped advise OAO Sberbank, Russia’s largest lender, on a $5.2 billion equity sale.
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