BELARUS NEWS AND ANALYSIS

DATE:

22/08/2007

S&P Evaluated Belarus Ahead of Others

Belarus has obtained its first credit rating yesterday. Standard & Poor`s assigned the B+ score to the long-term foreign-currency denominated loans of the country. The short-term paying capacity of Belarus was evaluated equal to Georgia and Ukraine. In the short run, the S&P rating will enable Belarus to release eurobonds and set off the payments to Gazprom. In the long-term, it will make it possible for local companies to borrow outside CIS and the Baltic states.

Standard & Poor`s Ratings Services announced yesterday it assigned the first credit ratings to Belarus. Similar to Georgia, Belarus got the B+ sovereign credit rating for long-term loans denominated in foreign currency. Its short-term sovereign rating stands at B (same as Georgia and Ukraine) and Belarus has the BB long-term sovereign credit rating for national currency loans. The outlook is stable for all ratings.

The history of Belarus' rating efforts commenced far back in 1996. But the problem turned into a political issue. President Alexander Lukashenko used to break negotiations with S&P on repeated occasions.

In June 2007, Belarus Finance Ministry announced the launch of new talks with Standard & Poor`s, Moody`s and Fitch, but Standard & Poor`s outpaced its rating competitors and was the first to give its score to Belarus.

"This fact will allow to attract investments to the country and place bonds under more advantageous terms, though of course, it is just in the long view," Belarus' Finance Minister Sergey Zdanovich said when commenting on the S&P rating. But the official didn't specify any definite amount of the loans to be attracted by the government.

Some time earlier, however, Belarus' Finance Ministry has voiced the plans to launch eurobonds in the fall of 2007 to set off the reduction in financial reserves of the country resulted from gas payments to Gazprom.

Besides, the sovereign credit rating of Belarus will materially reduce the cost of any corporate loans for it.

Of interest is that S&P is quite positive about the condition of Belarus' budget. When compiling the score, it took into account rather high GDP of the country and its low debt (9 percent of GDP). Given that Russia hiked gas prices for Belarus, S&P forecasts its balance of payments deficit to go up to 8 percent to 11 percent of GDP in 2007 to 2010 and the state budget shortage to grow to 9 percent by 2010. The rates of economy advance are predicted to slow down to 4 percent a year in 2007 to 2010 (vs. today's 7 percent to 8 percent).

Source:

http://www.kommersant.com/p797198/r_527/S&P_rating_Belarus/

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