A credit rating assigned by ACRA to a rated entity is the Agency’s subjective opinion on its current and future creditworthiness (financial reliability or stability), expressed using the rating category according to a certain rating scale.

The creditworthiness (financial reliability or stability) of a rated entity is its ability to fulfil its financial obligations. A credit rating is not an assessment of the credit risk of any debt financial instrument issued by that rated entity.

ACRA assigns credit ratings according to the following scales:

Apart from credit ratings, ACRA assigns non-credit ratings in accordance with the following scales established by the Agency:

National Rating Scale for the Russian Federation

ACRA’s national rating scale is used exclusively to assign underlying credit ratings and is not used to assign credit ratings to structured finance instruments and obligations. Underlying credit ratings include credit ratings assigned to rated entities (or to their financial obligations, or to individual issues of financial instruments) representing the corporate, banking, non-bank financial, and insurance sectors, as well as regional and municipal authorities.

ACRA’s national rating scale only allows for comparing the credit ratings assigned by the Agency within the Russian Federation. In economic terms, the credit ratings assigned by ACRA under the national scale reflect the relative probability of default of rated entities (or securities) compared to the highest possible level of creditworthiness in the Russian economy — the one that, in ACRA’s opinion, is possessed by the debt obligations of the Government of the Russian Federation and certain derivatives thereof.

In some cases, such as credit rating assignment to individual financial instruments, the scale reflects an assessment of the relative probability of a real default on a financial instrument, as well as that of the loss recovery the holders of the instrument can potentially count on in the event of bankruptcy.

Table 1. ACRA’s National Rating Scale for the Russian Federation

Category

Rating

Description

AAA

AAA(RU)

Maximum level of creditworthiness assigned to rated entities, securities issues, or financial liabilities. The highest credit rating under the national scale of the Russian Federation, according to the Agency. The credit rating of financial liabilities of the Government of the Russian Federation.

AA

AA+(RU)

High creditworthiness compared to other rated entities, securities, or financial liabilities in the Russian Federation; although, according to ACRA, slightly lower than AAA(RU).

AA(RU)

AA-(RU)

A

A+(RU)

Moderately high creditworthiness compared to other rated entities, securities or financial liabilities in the Russian Federation; however, somewhat sensitive to adverse changes in the business, financial, and economic environment in the Russian Federation.

A(RU)

A-(RU)

BBB

BBB+(RU)

Moderate creditworthiness compared to other rated entities, securities, or financial obligations in the Russian Federation, with a higher sensitivity to adverse changes in the business, financial, and economic environment in the Russian Federation.

BBB(RU)

BBB-(RU)

BB

BB+(RU)

Moderately low creditworthiness compared to other rated entities, securities, or financial liabilities in the Russian Federation. Creditability is stable in the short term, but there is high sensitivity to adverse changes in the business, financial, and economic environment in the Russian Federation.

BB(RU)

BB-(RU)

B

B+(RU)

Low creditworthiness compared to other rated entities, securities, or financial liabilities in the Russian Federation. At this stage, the entity can still fulfil its debt liabilities in full and on time but is highly vulnerable to unfavorable business, financial, and economic conditions in the Russian Federation.

B(RU)

B-(RU)

CCC

CCC(RU)

Very low creditworthiness compared to other rated entities, securities, or financial liabilities in the Russian Federation. It is possible that the rated entity will fail to fulfil its debt liabilities in the short term. Timely fulfillment of debt obligations is largely dependent upon a favorable business, financial, and economic environment in the Russian Federation.

СС

CC(RU)

Very low creditworthiness compared to other rated entities, securities, or financial liabilities in the Russian Federation. There is a high probability of the rated entity defaulting on its debt liabilities in the short term. Timely fulfillment of debt liabilities hinges on a favorable external economic and financial environment inside the Russian Federation, as well as on good creditor relations.

С

C(RU)

Very low creditworthiness compared to other rated entities, securities, or financial obligations in the Russian Federation. There is a high probability of the rated entity defaulting on its debt liabilities in the short term. Timely fulfillment of debt liabilities is highly unlikely without concessions from creditors.

RD

RD(RU)

The rated entity is controlled (or significantly influenced) by the regulator. As a rule, in such cases, the regulator may determine the priority of liabilities or suspend payments to creditors.

SD

SD(RU)

The rated entity is in default on one of its financial liabilities, but the Agency believes that the rated entity will continue to promptly service its other financial liabilities.

D

D(RU)

The rated entity is in default on its financial liabilities.

Source: ACRA

National Rating Scale for the Russian Federation for SMEs

ACRA uses its corresponding national rating scale for the purpose of a more accurate comparison of rated entities that belong to the small and medium-sized business (SME) segment. This scale is not independent and serves solely for the purpose of clarifying the Agency’s opinion on the creditworthiness of the rated SME through additional segmentation of the lower rating grades of the ACRA’s National Rating Scale for the Russian Federation.

Table 2. ACRA’s National Rating Scale for the Russian Federation for SMEs

Category

Rating

SME Rating

Description

BBB

BBB-(RU)

BBB-.1(ru.sme)

Moderate level of creditworthiness compared to other rated entities, securities or financial liabilities in the Russian Federation, with higher sensitivity to the impact of adverse changes in the business, financial, and economic environment in the Russian Federation.

BBB-.2(ru.sme)

BB

BB+(RU)

BB+.1(ru.sme)

Moderately low creditworthiness compared to other rated entities, securities or financial liabilities in the Russian Federation. Creditworthiness is stable in the short term, but there is high sensitivity to the impact of adverse changes in the business, financial and economic conditions in the Russian Federation.

BB+.2(ru.sme)

BB(RU)

BB.1(ru.sme)

BB.2(ru.sme)

BB-(RU)

BB-.1(ru.sme)

BB-.2(ru.sme)

B

B+(RU)

B+.1(ru.sme)

Low level of creditworthiness compared to other rated entities, securities or financial liabilities in the Russian Federation. Currently, it is possible to meet debt obligations on time and in full, but there is high vulnerability in the event of unfavorable business, financial, and economic conditions in the Russian Federation.

B+.2(ru.sme)

B(RU)

B.1(ru.sme)

B.2(ru.sme)

B-(RU)

B-.1(ru.sme)

B-.2(ru.sme)

CCC

CCC(RU)

CCC(ru.sme)

Very low creditworthiness compared to other rated entities, securities or financial liabilities in the Russian Federation. It is possible that the rated entity may default on its debt obligations in the short term. The timely fulfillment of debt obligations is largely dependent on favorable business, financial and economic conditions in the Russian Federation.

CC

CC(RU)

CC(ru.sme)

Very low creditworthiness compared to other rated entities, securities or financial liabilities in the Russian Federation. There is an increased likelihood that the rated entity will default on its debt obligations in the short term. Timely fulfillment of debt obligations depends on favorable external financial and economic conditions in the Russian Federation, as well as on interaction with creditors.

C

C(RU)

C(ru.sme)

Very low creditworthiness compared to other rated entities, securities, or financial obligations in the Russian Federation. There is a high probability of the rated entity defaulting on its debt obligations in the short term. Timely fulfillment of debt obligations is highly unlikely without concessions from creditors.

RD

RD(RU)

RD(ru.sme)

The rated entity is controlled (or significantly influenced) by the regulator. As a rule, in such cases, the regulator may determine the priority of liabilities or suspend payments to creditors.

SD

SD(RU)

SD(ru.sme)

The rated entity is in default on one of its financial liabilities, but the Agency believes that the rated entity will continue to promptly service its other financial liabilities.

D

D(RU)

D(ru.sme)

The rated entity is in default on its financial liabilities.

Source: ACRA


Structured Finance Sector National Rating Scale for the Russian Federation

The (ru.sf) indicator appearing in the ratings of structured finance instruments and obligations shows that these instruments and obligations and underlying securities may have different risk characteristics.

The (ru.sf) is added to exclude any assumptions that the credit ratings of structured finance instruments and obligations and the base credit ratings standing at the same levels in respective rating scales have equal rating quality.

Table 3. Structured finance sector national rating scale for the Russian Federation

Category

Rating

Description

AAA

AAA(ru.sf)

Structured finance obligations or instruments with the AAA(ru.sf) rating are considered by the Agency to have the highest credit quality under the national scale for the Russian Federation, with minimal credit risk; the credit rating of financial obligations secured by the guarantee of the Government of the Russian Federation.

AA

AA+(ru.sf)

High level of credit quality compared to other rated structured finance obligations and instruments in the Russian Federation; however, as a rule, slightly lower than that of rated obligations and instruments with the AAA(ru.sf) credit rating.

AA(ru.sf)

AA-(ru.sf)

A

A+(ru.sf)

Moderately high level of credit quality compared to other rated structured finance obligations and instruments in the Russian Federation, but with some sensitivity to adverse changes in the business, financial and economic environment inside the Russian Federation and to their impact on parameters of underlying assets, collaterals, and other assets securing rated structured finance obligations and instruments, as well as operating risks.

A(ru.sf)

A-(ru.sf)

BBB

BBB+(ru.sf)

Moderate level of credit quality compared to other rated structured finance obligations and instruments in the Russian Federation, but with a higher sensitivity to adverse changes in the business, financial and economic environment inside the Russian Federation and to their impact on parameters of underlying assets, collaterals, and other assets securing the rated structured finance obligations and instruments, as well as operating risks.

BBB(ru.sf)

BBB-(ru.sf)

BB

BB+(ru.sf)

Moderately low level of credit quality compared to other rated structured finance obligations and instruments in the Russian Federation, with little to no risk of sharp deterioration in credit quality in the short term. However, displays higher sensitivity to adverse changes in the business, financial, and economic environment inside in the Russian Federation and to their impact on parameters of underlying assets, collaterals, and other assets securing the rated structured finance obligations and instruments, as well as operating risks.

BB(ru.sf)

BB-(ru.sf)

B

B+(ru.sf)

Low level of credit quality compared to other rated structured finance obligations and instruments in the Russian Federation. At this stage, the entity can still fulfil its debt obligations in a full and timely fashion; however, there it is highly vulnerable to adverse business, financial and economic conditions inside the Russian Federation and their impact on the parameters of underlying assets, collaterals, and other assets securing the rated structured finance obligations and instruments, as well as operating risks.

B(ru.sf)

B-(ru.sf)

CCC

CCC(ru.sf)

Very low level of credit quality compared to other rated structured finance obligations and instruments in the Russian Federation. There is a possibility of failure to fulfill rated obligations in the short term. Timely fulfillment of rated obligations depends on favorable business, financial, and economic conditions inside the Russian Federation and their impact on the parameters of underlying assets, collaterals, and other assets securing the rated structured finance obligations and instruments, as well as measures to reduce operating risks.

СС

CC(ru.sf)

Very low level of credit quality compared to other rated structured finance obligations and instruments in the Russian Federation. There is an increased probability of default on rated obligations in the short term. Timely fulfillment of rated obligations depends on favorable business, financial and economic conditions in the Russian Federation and their impact on the parameters of underlying assets, collaterals, and other assets securing the rated structured finance obligations and instruments, as well as measures to reduce operating risks.

С

C(ru.sf)

Very low level of credit quality compared to other rated structured finance obligations and instruments in the Russian Federation. There is a high probability of default on rated obligations in the short term. Timely fulfillment of obligations is highly unlikely without attracting additional sources capable of improving credit quality and reducing operating risks.

D

D(ru.sf)

The Rated Entity (or financial obligation) is in default on its structured finance obligations.

Source: ACRA

International Rating Scale

ACRA’s International Rating Scale is used solely to assign base credit ratings and not to assign credit ratings to structured finance instruments and obligations.

ACRA’s International Rating Scale allows for comparing credit ratings assigned by the Agency under the international scale, at the supranational level.

In their economic sense, ACRA’s ratings under the international scale may reflect a relative probability of default or expected losses of rated entities or issues of securities.

Table 4. ACRA’s international rating scale

Category

Rating

Description

AAA

AAA

The highest rating. An entity or an issue of securities or a financial obligation rated AAA demonstrates the maximum creditworthiness and the minimum sensitivity to unfavorable changes in business, financial and economic conditions, either domestic or international, and other external factors.

AA

AA+

High creditworthiness as compared to other rated entities or issues of securities or financial obligations. Low sensitivity to unfavorable changes in business, financial and economic conditions, either domestic or international, and other external factors. In ACRA’s opinion, the rating is insignificantly lower than that of entities rated AAA.

AA

AA-

A

A+

Moderately high creditworthiness as compared to other rated entities or issues of securities or financial obligations. Certain sensitivity to unfavorable changes in business, financial and economic conditions, either domestic or international, and other external factors.

A

A-

BBB

BBB+

Moderate creditworthiness as compared to other rated entities or issues of securities or financial obligations. Higher sensitivity to unfavorable changes in business, financial and economic conditions, either domestic or international, and other external factors.

BBB

BBB-

BB

BB+

Moderately low creditworthiness as compared to other rated entities or issues of securities or financial obligations. The creditworthiness is sustainable in the short-term, but there is high sensitivity to unfavorable changes in business, financial and economic conditions, either domestic or international, and other external factors.

BB

BB-

B

B+

Low creditworthiness as compared to other rated entities or issues of securities or financial obligations. The rated entity is able to perform debt obligations when due and in full, but it is highly vulnerable to unfavorable business, financial and economic conditions, either domestic or international, and other external factors.

B

B-

CCC

CCC

Very low creditworthiness as compared to other rated entities or issues of securities or financial obligations. The rated entity may potentially fail to perform its debt obligations in the short term. Timely performance of debt obligations largely depends on favorable business, financial and economic conditions, either domestic or international, and other external factors.

СС

CC

Very low creditworthiness as compared to other rated entities or issues of securities or financial obligations. There is an elevated likelihood of failure by the rated entity to perform its debt obligations in the short term. Timely performance of debt obligations depends on favorable business, financial and economic conditions, either domestic or international, and other external factors, as well as on relations with creditors.

С

C

Very low creditworthiness as compared to other rated entities or issues of securities or financial obligations. There is a high likelihood of failure by the rated entity to perform its debt obligations in the short term. Timely performance of debt obligations is extremely unlikely without favorable attitude of creditors.

RD

RD

The rated entity is under the control (significant influence) of the regulator. Generally, in such cases the regulator can prioritize the fulfillment of obligations or suspend payments to creditors.

SD

SD

The rated entity is in default on one of its financial obligations. However, ACRA believes that the rated entity will continue to timely service other financial obligations.

D

D

A rated entity or a financial obligation is in default.

Source: ACRA

International Scale of Short-Term Credit Ratings

The international rating scale of short-term credit ratings is used solely to assign base credit ratings and not to assign credit ratings to structured finance instruments and obligations.

The international rating scale of short-term credit ratings allows for comparing credit ratings assigned by the Agency under the international scale, at the supranational level.

Table 5. International scale of short-term credit ratings

Category

Description

S1+

A rated entity has the maximum creditworthiness with respect to short-term (less than a year) obligations, and its access to liquidity and short-term funding demonstrates the minimum sensitivity to unfavorable changes in the financial and economic conditions (including those at the international level) and other factors.

S1

A rated entity has a high creditworthiness with respect to short-term (less than a year) obligations, and its access to liquidity and short-term funding demonstrates a weak sensitivity to unfavorable changes in the financial and economic conditions (including those at the international level) and other factors.

S2

A rated entity has a moderately high creditworthiness with respect to short-term (less than a year) obligations, and its access to liquidity and short-term funding may be sensitive to unfavorable changes in the financial and economic conditions (including those at the international level) and other factors.

S3

A rated entity has a moderate creditworthiness with respect to short-term (less than a year) obligations, and its access to liquidity and short-term funding is sensitive to unfavorable changes in the financial and economic conditions (including those at the international level) and other factors.

B

A rated entity has a moderately low creditworthiness with respect to short-term (less than a year) obligations, and its access to liquidity and short-term funding is exposed to unfavorable changes in the financial and economic conditions (including those at the international level) and other factors.

C

A rated entity has a very low creditworthiness with respect to short-term (less than a year) obligations; its obligations depend heavily on the access to liquidity and short-term funding and favorable financial and economic conditions (including the support from international lenders) and other factors.

D

A rated entity (or financial obligation) is in default.

Source: ACRA

Figure 1. Correlation between long-term and short-term credit ratings

Long-term ratings

Short-term ratings

AAA

S1+

 

 

 

 

 

 

AA+

 

 

 

 

 

 

AA

 

 

 

 

 

 

AA-

S1

 

 

 

 

 

A+

 

 

 

 

 

 

A

 

S2

 

 

 

 

A-

 

 

 

 

 

BBB+

 

 

 

 

 

 

BBB

 

 

S3

 

 

 

BBB-

 

 

 

 

 

 

BB+

 

 

 

 

B

 

 

BB

 

 

 

 

 

 

BB-

 

 

 

 

 

 

B+

 

 

 

 

 

 

B

 

 

 

 

 

 

B-

 

 

 

 

 

 

CCC

 

 

 

 

C

 

CC

 

 

 

 

 

 

C

 

 

 

 

 

 

D/SD

 

 

 

 

 

 

D

Source: ACRA


International Structured Finance Rating Scale

In order to categorize credit ratings of structured finance instruments and obligations in different jurisdictions, ACRA applies its international structured finance rating scale represented by a system of letters and symbols.

Table 6. International structured finance rating scale

Category

Rating

Description

AAA

AAA.sf

The highest rating. Structured finance obligations or instruments rated AAA.sf are, in the Agency’s opinion, obligations and instruments of the highest credit quality with the lowest credit risk.

AA

AA+.sf

High credit quality compared to other rated structured finance obligations and instruments. Typically, it is slightly lower than obligations and instruments rated AAA.sf.

AA.sf

AA-.sf

A

A+.sf

Moderately high credit quality compared to other rated structured finance obligations and instruments, however, there is some sensitivity to adverse changes in commercial, financial or economic conditions (including those at the international level) and their impact on the performance of underlying assets, collateralized and other assets securing the rated structured finance obligations and instruments, as well as operational risks.

A.sf

A-.sf

BBB

BBB+.sf

Moderate credit quality compared to other rated structured finance obligations and instruments, however, there is elevated sensitivity to adverse changes in commercial, financial or economic conditions (including those at the international level) and their impact on the performance of underlying assets, collateralized and other assets securing the rated structured finance obligations and instruments, as well as operational risks.

BBB.sf

BBB-.sf

BB

BB+.sf

Moderately low credit quality compared to other rated structured finance obligations and instruments. There is almost no risk of sharp decline in the credit quality in the short term, however, there is high sensitivity to adverse changes in commercial, financial or economic conditions (including those at the international level) and their impact on the performance of underlying assets, collateralized and other assets securing the rated structured finance obligations and instruments, as well as operational risks.

BB.sf

BB-.sf

B

B+.sf

Low credit quality compared to other rated structured finance obligations and instruments. There is possibility to fulfill debt obligations when due and in full, but there is high vulnerability to adverse changes in commercial, financial or economic conditions (including those at the international level) and their impact on the performance of underlying assets, collateralized and other assets securing the rated structured finance obligations and instruments, as well as operational risks.

B.sf

B-.sf

CCC

CCC.sf

Very low credit quality compared to other rated structured finance obligations and instruments. There is a potential for default on the rated obligations in the short term. Timely fulfilment of rated obligations depends on favorable commercial, financial or economic conditions (including those at the international level) and their impact on the performance of underlying assets, collateralized and other assets securing the rated structured finance obligations and instruments, as well as operational risks mitigation measures.

СС

CC.sf

Very low credit quality compared to other rated structured finance obligations and instruments. There is an elevated likelihood of default on the rated obligations in the short term. Timely fulfilment of rated obligations depends on favorable commercial, financial or economic conditions (including those at the international level) and their impact on the performance of underlying assets, collateralized and other assets securing the rated structured finance obligations and instruments, as well as operational risks mitigation measures.

С

C.sf

Very low credit quality compared to other rated structured finance obligations and instruments. There is a high likelihood of default on the rated obligations in the short term. Timely fulfilment of rated obligations is extremely unlikely without additional sources of credit quality enhancement and operational risks mitigation measures.

D

D.sf

Rated entity (or financial obligation) is in default on its structured finance obligations.

Source: ACRA


NON-CREDIT RATING SCALES

The national scale of non-credit ratings for the Russian Federation used to assess the reliability of asset management companies

This rating scale uses (ru.am) indicator to show that ratings assigned under this scale are non-credit rating and they are not comparable with ratings assigned under any other scales applied by ACRA.

Table 7. ACRA’s national scale of non-credit ratings for the Russian Federation used to assess the reliability of asset management companies

Category

Rating

Description

AAA

AAA(ru.am)

Maximum reliability. Very low sensitivity to changes in legislation, client base, or investor pool.

AA

AA+(ru.am)

AA(ru.am)

AA-(ru.am)

Very high reliability. Low sensitivity to changes in legislation, client base, or investment team.

A

A+(ru.am)

A(ru.am)

A-(ru.am)

High reliability. Moderate sensitivity to changes in legislation, client base, or investment team.

BBB

BBB+(ru.am)

BBB(ru.am)

BBB-(ru.am)

Sufficient reliability. Sufficient sensitivity to changes in legislation, client base, or investment team.

BB

BB+(ru.am)

BB(ru.am)

BB-(ru.am)

Satisfactory reliability. Medium sensitivity to changes in legislation, client base, or investment team.

B

B+(ru.am)

B(ru.am)

B-(ru.am)

Low reliability. High sensitivity to changes in legislation, client base, or investment team.

CCC

CCC(ru.am)

Very low reliability. Very high sensitivity to changes in legislation, client base, or investment team.

SD

SD(ru.am)

Unacceptably low reliability. The Bank of Russia has either ordered a halt on the company’s activities or limited its scope. Massive client outflow.

D

D(ru.am)

Bankruptcy or license withdrawal.

Source: ACRA

Contact persons

Sergey Kutenko
Director - Acting Head of the Methodology Group
+7 (495) 139-0480, доб. 133


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