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OVERVIEW

  • In our view, the Russian Federation’s monetary policy flexibility has weakened, as have its economic growth prospects.
  • We are therefore lowering our foreign currency sovereign credit ratings on Russia to ‘BB+/B’ from ‘BBB-/A-3’ and our local currency sovereign credit ratings to ‘BBB-/A-3’ from ‘BBB/A-2’.
  • At the same time, we removed these ratings from CreditWatch, where they were placed with negative implications on Dec. 23, 2014.
  • The outlook is negative, reflecting our view that Russia’s monetary policy flexibility could diminish further. We could lower the ratings if external and fiscal buffers deteriorate over the next 12 months faster than we currently expect.

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OVERVIEW

  • In our view, Germany has a highly diversified and competitive economy with a demonstrated ability to absorb large economic and financial shocks.
  • Germany also benefits from low interest rates, which help lower sovereign borrowing costs in the medium term.
  • We are affirming our unsolicited ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings on Germany.
  • The stable outlook reflects our view that Germany’s public finances and strong external balance sheet will continue to withstand potential financial and economic shocks.

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OVERVIEW

We are reviewing our assessment of Russia’s monetary flexibility and the impact of the weakening economy on its financial system. As a result, we are placing our long-term sovereign credit ratings on Russia on CreditWatch with negative implications. We expect to resolve the CreditWatch upon the conclusion of our review, which we expect by mid-January.

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OVERVIEW

  • The United Kingdom has high monetary, labor, and product-market flexibility, and a wealthy and diversified economy.
  • Output and employment growth have exceeded our previous projections, but the U.K.’s fiscal position has underperformed our expectations and has yet to reflect a strengthening economy.
  • We are affirming our ‘AAA/A-1+’ long- and short-term sovereign credit ratings on the U.K.
  • The stable outlook reflects our assumptions that the U.K. fiscal position will gradually strengthen as real-wage and productivity growth improve toward pre-crisis averages, and that the government that emerges from the May 2015 general election will remain committed to fiscal consolidation.
    Our outlook also assumes the U.K.’s ongoing EU membership.

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OVERVIEW

  • In our view, the French government’s budgetary position is deteriorating in light of France’s constrained nominal and real economic growth prospects.
  • We believe that, due to policy implementation risk related to the budgetary consolidation and structural reforms, a recovery of the French economy could prove elusive and that France’s public finances might deteriorate beyond 2014, although this is not our base-case scenario.
  • As a result, we are revising our outlook on France to negative from stable and affirming our ‘AA/A-1+’ long- and short-term sovereign credit ratings.
  • The ratings on France remain supported by our view of the French economy’s high income per capita and productivity, its diversification, and its stable financial sector.

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S&P: Argentina Foreign Currency Ratings Lowered To ‘SD’ After Holders Of Discount Bonds Did Not Receive Interest Payment

  • On June 30, 2014, the Republic of Argentina failed to make a US$539 million interest payment on its discount bonds maturing in December 2033 (Discount Bonds). Standard & Poor’s does not rate the Discount Bonds. The Discount Bonds provide for a 30-day grace period for payment.
  • On July 30, the grace period expired with bondholders not receiving their payment.
  • We are therefore lowering our long- and short-term foreign currency sovereign credit ratings on Argentina to selective default (‘SD’) from ‘CCC-/C’, indicating that Argentina defaulted on some of its foreign currency obligations. At the same time, we are removing the ‘CCC-/C’ foreign currency ratings from CreditWatch, where they were placed with negative implications on July 1, 2014.
  • If and when Argentina cures the payment default on the Discount Bonds, we could revise our ratings on Argentina depending on our assessment at that time of Argentina’s residual litigation risk, its access to international debt markets, and its overall credit profile.

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OVERVIEW

  • We have revised our 2014-2016 average real GDP growth projections for Ireland upward to 2.7% from 2.0%.
  • This reflects our expectation of a continued strong external performance and a sustained recovery of the domestic economy.
  • We are therefore raising our long-term sovereign credit ratings on Ireland to ‘A-‘ from ‘BBB+’. We are affirming the short-term ratings at ‘A-2’.
  • The outlook is positive, reflecting our view of at least a one-in-three possibility that we could raise our ratings on Ireland again in the next two years.

RATING ACTION

On June 6, 2014, Standard & Poor’s Ratings Services raised its long-term foreign and local currency sovereign credit ratings on the Republic of Ireland to ‘A-‘ from ‘BBB+’. At the same time, we affirmed the short-term ratings at ‘A-2’. The outlook is positive.

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