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March 11 (Bloomberg by Emma O’Brien) -- Russia is “not yet on the brink” of a credit-rating downgrade by Moody’s Investors Service as the ruble and foreign reserves stabilize and the government resists taking corporate debt obligations. The ratings firm has no current plans to follow Standard & Poor’s and Fitch Ratings, which both cut their debt ratings for Russia since December, according to Jonathan Schiffer, Moody’s lead analyst on Russian sovereign debt. Moody’s rates Russia at Baa1, three levels above non-investment grade and a step higher than equivalent ratings from S&P and Fitch. “Relative to where they were a couple of months ago, things are looking better for Russia, they’re no longer in free fall,” Schiffer said in a telephone interview from New York yesterday. “They would seem to have the resources to deal with debt payments for the next 12 to 18 months.” The ruble has gained 2.7 percent against the dollar since the end of January, paring a 35 percent slide in the previous six months that caused the central bank to drain more than a third of its foreign-currency reserves since August to slow the depreciation. Investor confidence is returning after oil, Russia’s main export earner, rebounded 1 percent this year and the central bank deterred speculators with pledges to defend the currency and restrict bank lending. The government is insulating the country’s finances from the debt burden of Russian companies. First Deputy Prime Minister Igor Shuvalov said yesterday that the government won’t guarantee taking over companies’ debt, a month after state lender Vnescheconombank said it will stop issuing loans to help companies repay foreign debt. Not Taking on Debt After giving loans to companies such as United Co. Rusal, the aluminum producer controlled by Oleg Deripaska, the government will no longer provide bailout cash to oligarchs and business tycoons, said Arkady Dvorkovich, President Dmitry Medvedev’s economic adviser, according to a Wall Street Journal report March 9. Rusal and steelmaker Evraz Group SA benefited from $11 billion in government funds last year. “From the point of view of the sovereign rating, it’s a good thing as it means that the government’s not taking onto its books all manner of other debts,” Schiffer said. “Going forward, the Rusals of the world are going to have to find their own solution.” Reserves rose $2.4 billion to $384.3 billion in the week to Feb. 27, as the strengthening ruble limited the need for the central bank to spend its foreign-exchange reserves. The $820 million decline of reserves in February was the smallest monthly drop since August. Arresting Drop Russia’s reserves, the world’s third-largest after China’s and Japan’s, have fallen 36 percent from a record $598.1 billion in the second week of August when Russia’s war with neighboring Georgia led investors to shun the country’s assets. Investors have withdrawn more than $300 billion from Russia since August, according to BNP Paribas SA data. The Micex stock index has slumped 49 percent in the period as Urals crude, the country’s chief export oil blend, fell 70 percent from a record $142.94 a barrel in July. Russia is “seen as going in a good direction rather than a bad direction,” Schiffer said. “They no longer have $600 billion, that’s clear, but they still have a reasonable amount of money. The rate at which the reserves decline is slowing is a good thing.” State Debt Moody’s, which raised its rating on Russia in July from Baa2, lowered its outlook on the rating in December to “stable” from “positive” because of the reserves attrition and lack of action to stabilize the banking system. S&P cut its debt rating for Russia for the first time in nine years that month and Fitch followed in February with its first downgrade of Russia in more than a decade. Both rating companies reduced Russia to BBB, two steps above the high-yield, high-risk category, citing capital outflows and declining reserves. State foreign debt dropped 9.8 percent last year to $40.5 billion as of Jan. 1, according to the Finance Ministry. That leaves the country “in a reasonable position at the moment,” Schiffer said. Banks such as OAO Sberbank and VTB Group are “not in great difficulty” and state-linked companies such as OAO Gazprom, the world’s largest gas company, and OAO Rosneft, Russia’s biggest oil producer, are likely to have enough access to funds to be able to pay their own debt, Schiffer said. Gazprom has $7.3 billion of debt due this year and Rosneft has $3.1 billion maturing in 2012, according to Bloomberg data. ‘Managing Better’ “Some countries are going to manage better than others and Russia seems to be in the latter category at this stage,” Schiffer said. “The issue is, can they pay their debt? They should be able to pay that for quite some time to come.” The ruble traded at 39.4375 against the basket, down 0.4 today and snapping a two-day advance. That’s still 3.8 percent stronger than the 41 level that Bank Rossii said it would defend in January when the central bank brought the ruble’s “gradual devaluation” to an end. Russia’s transition to a “dirty float” of the ruble is a “step in the right direction,” said Schiffer, adding Russia will probably eventually be forced to move to a full free float of the currency as the global crisis continues. In a dirty float, a central bank intervenes sparingly in a currency, only when it is judged necessary to avert an economic shock. Basis for Recovery The stabilization of the ruble and oil prices provide a “good basis” for recovery in Russian equities, Goldman Sachs Group Inc. analysts wrote in note today, echoing comments by UBS AG yesterday. Russian shares will play “catch up” with other emerging markets as investors target the stocks because they are cheap, the UBS report issued yesterday said. The benchmark Micex Index slipped 1.1 percent to 742.21 at 2:35 p.m. in Moscow, after closing yesterday at a four-month high. Crude oil fell for a second day in New York.