John Ward – Wobbly Russia : Vladimir Putin Sticks The Boot Into The Regions, And The Rating Agencies – 28 August 2012

Yet again, you read it here first…

In May of this year, The Slog pointed out how vulnerable some of the comparatively well-rated Russian regions are….how dependent Russia is on energy….and how exposed RBS is to Russia.

The following month, I asked if the ratings agencies really know what they’re doing in Russia given the degree of dodginess in there. And at the end of July I posted this piece asking if they knew WTF they were doing in any sovereign State anywhere on the planet.

I’ve long suspected that the answer is “No” to the last of these queries, but when it comes to the Russian regions, it would seem that Comrade Rasputin is about to give them pause for thought. I could do little better than quote this Bloomberg report verbatim from today’s website:

‘Regions such as Yaroslavl, featured on the 1,000 ruble note, are paying record rates to replace shorter-term bank loans as President Vladimir Putin warns of financial mismanagement.

Yaroslavl, about 75 miles northeast of Moscow, sold 3 billion rubles ($94 million) of three-year notes last week at 9.1 percent, an all-time high for the region and Russia’s first municipal sale in three months. Volgograd, named after Europe’s longest river, set a record 9.67 percent coupon for the 1 billion rubles of five-year notes it plans to sell Aug. 29.

Putin warned July 17 that the finances of some of the country’s regions may spiral out of control if they don’t end their reliance on short-term bank loans. Local governments have grown more dependent on federal funding since market turmoil in 2008-2009 forced a retreat from the bond market.’

Now lookee here, folks: I’m no Tyler Durden, nor do I pretend to be. But if an old bloke with a halfway decent brain who’s never even been to Russia – and has just the two (count them) sources there, how come I seem to know better what’s coming down the road than Standard & Poors?

Like I say, this isn’t Zero Hedge. But I can add up, I can read, and I do aim to make deconstruction of this sort of bollocks accessible to the amateur commonsense guy comme moi, squire.

Is there any point to ratings agencies? For once, I seem to be with the pols re this one. OMG. Quick, let’s finish Charlie in Hut B and make good our escape….last one in the Ritz is a pansy…. link to original article

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