OREANDA-NEWS. June 23, 2010. Standard & Poor's does not believe there are sufficient preconditions to upgrade Belarus’ ratings, Ekaterina Trofimova, a bank rating director with Standard & Poor's said.

“We have recently confirmed Belarus’ sovereign ratings, leaving the ‘negative’ outlook. This means we see no preconditions for an upgrade. The chief factors we are watching now are the state debt dynamics, budget deficit and inventories, which could become a ‘time bomb’ in the worst-case scenario. At the same time, the gradual sale of stocks earlier this year reduces the risk of explosive situations,” she said.

She said amid the crisis many countries have negative outlooks, “which does not necessary mean the ratings will be downgraded”. “Under our methodology, a negative outlook indicates a 30% chance of a rating reduction within 24 months. For Belarus, the negative outlook has been there for 12 months, but the ratings have remained unchanged,” Trofimova said.

She went on to say that the Belarusian economy was “very open and deeply integrated into the global economic community”, which makes the country dependent on the economic health of the neighbors and partners. “If the recovery rate of the largest trade partners should slow, it will affect the expansion pace of Belarus,” she said.

S&P staff believe a few months to come will be hard for the global economy. “The recovery is underway, but it is taking too long, and markets remain volatile; new periods of recession are possible. If negative trends get more pronounced in Europe, Russia, the largest exporter of raw materials to Europe, will find itself under additional pressure, hence an impact on the Belarusian economy,” Trofimova said.

However, investors are getting more interested in the Belarusian market, the expert said. “We contact investors in Europe, the United States and Asia and observe a growing interest in the Belarusian market, which, in its turn, increases expectations of regular and complete information disclosure and importance of ratings,” Trofimova said.

Asked whether the instability of the European market could impede Belarus’ Eurobond placement, Trofimova said: “Despite the volatile nature of foreign markets and fluctuations in investors’ moods, we see windows of opportunities, which have been used in the past few months by the Russian Federation, which issued its Eurobond, and some Russian banks.”

Standard & Poor's Ratings Services on May 4, 2010 affirmed its 'B+/B' foreign currency and 'BB/B' local currency long-term and short-term sovereign credit ratings on the Republic of Belarus. The outlook is negative.