Identifier
Created
Classification
Origin
06YEREVAN768
2006-06-06 11:46:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Yerevan
Cable title:
FITCH RATES ARMENIA "BB-" WITH A STABLE
how-toVZCZCXRO9266 RR RUEHDBU RUEHLN RUEHVK RUEHYG DE RUEHYE #0768 1571146 ZNR UUUUU ZZH R 061146Z JUN 06 FM AMEMBASSY YEREVAN TO RUEHC/SECSTATE WASHDC 3312 INFO RUCPDOC/USDOC WASHDC RUEATRS/DEPT OF TREASURY WASHDC 0425 RUCNCIS/CIS COLLECTIVE RUEHAK/AMEMBASSY ANKARA 1052 RUEHIT/AMCONSUL ISTANBUL 0470
UNCLAS YEREVAN 000768
SIPDIS
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN ETRD AM
SUBJECT: FITCH RATES ARMENIA "BB-" WITH A STABLE
OUTLOOK
Sensitive but unclassified. Please protect
accordingly.
-------
SUMMARY
-------
UNCLAS YEREVAN 000768
SIPDIS
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN ETRD AM
SUBJECT: FITCH RATES ARMENIA "BB-" WITH A STABLE
OUTLOOK
Sensitive but unclassified. Please protect
accordingly.
--------------
SUMMARY
--------------
1. (SBU) On June 5, 2006, Fitch Ratings assigned
Armenia foreign and local Issuer Default Ratings (IDR)
of "BB-" with a Stable Outlook. This is the first time
Armenia has received a sovereign credit rating from an
internationally-recognized rating company.
Representatives from the Central Bank of Armenia (CBA)
and the International Monetary Fund (IMF) are pleased
with the rating which should significantly improve
Armenia's ability to participate in the international
financial arena and attract foreign investment. End
Summary.
2. (SBU) Head of the Monetary Policy Department at the
CBA Artur Stepanyan told us that the rating was "a
relatively good estimate...which gives foreign
businessmen an adequate picture of the country's
investment climate." He noted that, according to the
Fitch ratings, "Armenia is doing better than Georgia
(which is not ranked),but worse than Russia and
Azerbaijan." Managing Director of Fitch's Sovereigns
Group David Riley also said "Armenia's credit ratings
are supported by prudent macroeconomic policies and a
declining public and external debt burden that compared
favorably with rated peers."
3. (U) While Fitch recognized Armenia's impressive
economic growth, the "BB-" rating falls in the
"vulnerable" category. Fitch identified certain
weaknesses in the economy which Armenia should strive
to improve. Fitch particularly focused on Armenia's
low per capita income (USD 1,500 in 2005 in Armenia,
compared to USD 2,500 for "BB" rated countries),
extensive dollarization, shallow capital markets, low
domestic savings and low tax collection rates. While
Fitch judged the likelihood of resumption of violent
conflict with Azerbaijan to be low, the absence of a
permanent solution to the Nagorno-Karabakh conflict and
the lack of normal relations with Turkey were both
identified as part of Armenia's challenging political
situation.
--------------
COMMENT: RATING A GOOD DEAL
--------------
4. (SBU) Having a Fitch rating, even in the
"vulnerable" category, is good news for Armenia and is
likely to strengthen its ability to attract foreign
capital. We agree with Fitch's positive assessment of
Armenia's macroeconomic situation and understand that
other international ratings companies including
Standard and Poor's and Moody's are considering issuing
ratings for Armenia in the near future.
EVANS
SIPDIS
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN ETRD AM
SUBJECT: FITCH RATES ARMENIA "BB-" WITH A STABLE
OUTLOOK
Sensitive but unclassified. Please protect
accordingly.
--------------
SUMMARY
--------------
1. (SBU) On June 5, 2006, Fitch Ratings assigned
Armenia foreign and local Issuer Default Ratings (IDR)
of "BB-" with a Stable Outlook. This is the first time
Armenia has received a sovereign credit rating from an
internationally-recognized rating company.
Representatives from the Central Bank of Armenia (CBA)
and the International Monetary Fund (IMF) are pleased
with the rating which should significantly improve
Armenia's ability to participate in the international
financial arena and attract foreign investment. End
Summary.
2. (SBU) Head of the Monetary Policy Department at the
CBA Artur Stepanyan told us that the rating was "a
relatively good estimate...which gives foreign
businessmen an adequate picture of the country's
investment climate." He noted that, according to the
Fitch ratings, "Armenia is doing better than Georgia
(which is not ranked),but worse than Russia and
Azerbaijan." Managing Director of Fitch's Sovereigns
Group David Riley also said "Armenia's credit ratings
are supported by prudent macroeconomic policies and a
declining public and external debt burden that compared
favorably with rated peers."
3. (U) While Fitch recognized Armenia's impressive
economic growth, the "BB-" rating falls in the
"vulnerable" category. Fitch identified certain
weaknesses in the economy which Armenia should strive
to improve. Fitch particularly focused on Armenia's
low per capita income (USD 1,500 in 2005 in Armenia,
compared to USD 2,500 for "BB" rated countries),
extensive dollarization, shallow capital markets, low
domestic savings and low tax collection rates. While
Fitch judged the likelihood of resumption of violent
conflict with Azerbaijan to be low, the absence of a
permanent solution to the Nagorno-Karabakh conflict and
the lack of normal relations with Turkey were both
identified as part of Armenia's challenging political
situation.
--------------
COMMENT: RATING A GOOD DEAL
--------------
4. (SBU) Having a Fitch rating, even in the
"vulnerable" category, is good news for Armenia and is
likely to strengthen its ability to attract foreign
capital. We agree with Fitch's positive assessment of
Armenia's macroeconomic situation and understand that
other international ratings companies including
Standard and Poor's and Moody's are considering issuing
ratings for Armenia in the near future.
EVANS