Does Russia deserve its junk bond rating?

Of course not. S&P, Moody’s, and Fitch destroyed their credibility by rating subprime mortgage bonds as AAA during the housing bubble. Their downgrades earlier this year of Russian debt to junk were even more outrageous.

On December 24, 2014, when S&P first announced that there was a 50% chance of them downgrading Russian debt to junk within 90 days – NIA saw this as an opportunity to buy Russian bonds, which we knew were completely mispriced due to the west’s economic war against Russia. Immediately following S&P’s announcement, the western mainstream media published numerous biased articles claiming that Russia would soon default on its debt – even though Russia’s debt/GDP ratios were among the world’s lowest, with Russia having enough foreign currency reserves to completely pay off all of its outstanding debt.

NIA on December 24th suggested that its members buy the Russian 10-year bond at a yield of 13.57%. NIA predicted that the yield of the Russian 10-year bond would decline in 2015 to 10%. (Bonds rise in price when their yield declines.)

On October 26, 2015, the Russian 10-year bond yield settled at 10.02%, after reaching an intraday low on October 23, 2015, of 9.96%. Over the last 10 months, the Russian 10-year bond has earned a larger total return adjusted for inflation than any other 10-year government bond in the world.

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