Russia strives at investment ratings

The investment climate in Russia has continued to improve. The Russian government believes that the country's ratings will be upgraded to "invest" in the near future. Schroder Salomon Smith Barney (SSSB), a division of Citigroup, shares this opinion. According to the group's forecasts, released in an investor report on the outlooks for the Russian economy, Russia will receive the investment rating in 2004. The accelerated rate of structural and institutional reforms is to contribute to this. The country's current ratings have reached the level of 1996. The situation seems to be a paradox, as today's state of the Russian economy has a number of essential distinctions from that period. Financial self-sustainability is testified to by the continuous growth of gold and currency reserves, while several years ago the Russian Central Bank spent enormous amounts of money for supporting the ruble rate. Budgets with a surplus, accurate debt payments and the absence of new foreign debts are additional evidence of this. Reserves, created due to high world oil prices and large export volumes, allow Russia to successfully resolve the problem of peak debt repayments this year. At the same time, more and more companies are appearing in Russia, which demonstrate a high growth rate, correspond to western standards of financial transparency and corporate governance, and due to this attract both domestic and foreign investments. The RBC company, which operates in the IT and the mass media industries, is illustrative. The company was incorporated in 1993 as a business information agency. In 1995, RBC was the first Russian information agency to setup its own Internet server. In 1996, the first information system in Russia, which transmitted trade information from Russian trading platforms online, appeared on the server. Over the last few years, RBC has obtained the leading position on the Russian software market, developing its own know-how and promoting solutions of major world producers. Simultaneously, the company regularly released new information products, opened specialized Internet sites, and enhanced its leadership on the Russian market of Internet advertising. In 2001, well-known representatives of western business circles became members of RBC's Board of Directors, Hans-Joerg Rudloff, Michael Hammond and Neil Osborn among them. Over the past three years, RBC's growth rate exceeded 700 percent. Due to this, the company has become the only Russian enterprise among the first hundred of companies of Deloitte&Touche Fast 500. Last April, RBC held the first IPO in Russia on the domestic market. The company is currently No 5 among Russian companies, estimated by investors as having the most optimistic outlooks. After the floating, the company's capitalization reached $83m. RBC's perspectives do fill one with optimism. The Russian stock market continues soaring. The high-tech industry enjoys state support at the top level. Last year, the Russian advertising market gained over 50 percent. Now Russia is among the ten largest European markets. RBC, which media division has the largest business audience in the country, will undoubtedly take advantage of this success. Even more so, as due to the launch of the first Russian business TV channel RBC-TV, scheduled for this spring, RBC's advertising opportunities will rocket. Powerful media assets, independent from the state and from large financial industrial groups, are one of the most serious arguments in favor of RBC. Such successful companies influence the situation in the Russian economy considerably, contributing to the improvement of the investment climate in the country to the extent comparable to the implementation of reforms. Consequently, favorable forecasts regarding upgrading Russia's investment ratings have additional sound grounds.

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