Russia created a credit rating agency, which is great for Russia because it will ignore one key type of risk

RussiaReuters/Alexander DemianchukAnimal tamer Askold Zapashny of the Zapashny Brothers’ circus kisses a lion during the premiere of the circus’ show

Sick of getting downgraded, Russia is launching its own new rating company that will be immune to geopolitical risks.

“The Russian market needs a strong credit rating agency with a high level of corporate governance and professional competence, capable of satisfying the interests of the economy [that is] authoritative enough for Russian and foreign investors,” according to statement released by the Central Bank of Russia on Friday.

“Rating agencies are one of the most important elements of financial-market infrastructure and their activity should be resilient to various factors, including geopolitical risks,” according to the statement.

In other words, the statement implies that a rating agency’s assessment should not be affected by factors such as geopolitical risk.

The company will be led by Ekaterina Trofimova, the first vice-president of Gazprombank, and will begin operations next quarter. It will have 3 billion rubles (roughly $US51.2 million) in capital.

This announcement comes after the S&P and Moody’s cut Russia to junk in 2015. Both agencies cited the ongoing conflict in Ukraine in their statements.

At the time, the Russia’s finance minister Anton Siluanov stated that the aforementioned downgrades were based on “political factors.”

Moody’s rating was “not overly negative, but also based on an extremely pessimistic outlook, which has no analogues today,” Siluanov told the WSJ in February.

“The agency has ignored all the information provided to it about the current state of the Russian economy, its budgetary and financial policy, which has been provided to it,” he added.

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