Russia's long-term sovereign credit rating outlook was lowered yesterday (Thursday) - to negative - by Standard & Poor's Ratings Services due to their assessment that the cost of the government's "bank rescue operation'' may increase. S&P cut their outlook from stable, a move which reflects the increased probability of a downgrade at some point in the future. Russia has committed as much as 15 percent of gross domestic product in budgetary and reserve funds to maintain banking liquidity, according to calculations made by the rating agency. At the same time S&P affirmed Russia's BBB+ long-term foreign currency and the A- long-term local currency ratings and the short-term ratings of A-2.``We expect Russian corporate and financial sector default rates to increase asdebtors' access to official funds will vary,'' S&P said in the statement.``Other uncertainties remain regarding what the economic policy response will ...

Russia's government plans to lend the country's biggest banks 950 billion rubles ($36 billion) for at least five years in an attempt to unfreeze credit markets, according to a new plan announced by President Dmitry Medvedev this morning. State-run OAO Sberbank and VTB Group, will get 500 billion rubles and 200 billion rubles respectively.Some 450 billion roubles ($17.19 billion) of the 950 billion rouble subordinate loans package for banks will come from one of the National Wealth Funds according to Finance Minister Alexei Kudrin said on Tuesday. Russia's two oil wealth funds totalled $189.7 billion as of Oct. 1.The Russian authorities, who are currently grappling with the worst financial crisis since the government's debt default in 1998, have already pledged more than $150 billion for banks and companies through loans and tax benefits (see details in this post here). Stocks rose ...

The Kommersant has featured an interview with former director of the International Energy Agency Claude Mandil, who believes Nabucco can only be implemented with Russia, and not against it, but that the war in Georgia has "somewhat clouded relations between Russia and the EU". Russian power producer OGK-2 is seeking a $1.6 billion capital increase to fund the purchase of coal deposits, as "other forms of funding dry up amid the credit crisis", the company's head stated today. OAO Rosneft, Russia's largest oil producer, rose as much as 6 percent to 210.90 rubles today, while OAO Lukoil, the biggest non-state oil company, gained 0.5 percent to 1,657.73 rubles on the Micex. The yield on Lukoil's 7.1 percent bond maturing in 2011 advanced 104 basis points to 11.16 percent today.

Russia's President Dmitry Medvedev today pledged $20 billion in financial support for the Russian stock market and cut oil taxes in an attempt to bring a halt to what has now become Russia's worst financial crisis in a decade. Medvedev took this action in order to try to lay the basis for a reopening of Russia's bourses tomorrow, following three days of irregular operation on the back of a 25% drop in the Micex Index. Following the announcement Russian shares traded in London surged and the interbank lending rate plunged.The announcement followed a meeting between Medvedev, the central bank Chairman Sergey Ignatiev and Russia's Finance Minister Alexei Kudrin. Ignatiev also announced that central bank reserve requirements for Russia's banks would be eased in an attempt to provide more liquidity.The tax cut for oil exports will come into effect on Oct. 1 and save producers and refiners ...

Russian stocks rose the most in two weeks today as investors bought into an equity market that now has the cheapest valuations in two years. In particular OAO Rosneft, Russia's biggest oil producer, surged as crude oil prices rose for a fourth day. Bank Vozrozhdenie and AFI Development Plc gained after reporting earnings. Crude for October delivery rose as much as $1.74, or 1.5 percent, to $119.89 a barrel in New York as meteorologists forecast Tropical Storm Gustav will be the most damaging since Hurricane Katrina. The ruble-denominated Micex Index climbed 2.6 percent to 1,337.02 at 4:05 p.m. in Moscow, its biggest gain since Aug. 11. The dollar-denominated RTS Index rose 2.4 percent to 1,626.65, a second day of gains. The RTS has retreated more than any other major stock market so far this quarter as Russia sent troops into Georgia, falling oil prices ...