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| Source: Renaissance Capital |
Even before the arrest last month of Mikhail Khordorkovsky and the freezing of a large block of Yukos shares, Moody's decision on October 8 to raise Russia's sovereign credit rating, from Ba2 to Baa3, had been greeted with as much concern as joy. The RTS closed that day 3% up at an all-time high of 628.98. Yields for Russia's 2030 Eurobond contracted by 40 basis points.
Mobile Telesystems and Magnitogorsk Metallurgiisky Kombinat, delayed bond issues to take advantage of the move. Gazprombank increased its five-year bond issue from $300 million to $750 million, with many bids coming from retail investors.
Some analysts were euphoric. UFG said: "Russia's macro and financial strength have long deserved an investment grade." Renaissance Capital's Alexey Moisseev and Pavel Mamai said: "In our view, an upgrade to investment grade is an event of such magnitude that it is difficult to underestimate."
However, the upgrade also raised some eyebrows. Market participants were expecting an upgrade of one notch, after the Duma elections in December or the presidential elections next March.