YEREVAN, May 14. / ARKA /. Countries in the Commonwealth of Independent States (CIS) will continue to be affected by oil price movements and Russian spillovers in 2015-16, says Moody's Investors Service in its annual CIS Sovereign Outlook, published today.

"We expect that challenging conditions for CIS countries will continue to persist over the next 12 to 18 months," says Ernest Sergenti, an analyst at Moody's.

"Despite the recent recovery, oil prices remain at suppressed levels and continue to affect oil exporters. Meanwhile, the outlook for net energy importers remains bleak as they rely heavily on Russia for remittances, trade and finance. Other challenges some countries face include exposure to the Ukraine crisis and weak banking systems."

Russia's recession continues to adversely affect the macroeconomic environment of other CIS countries, says Moody's. Within the CIS region, Moody's has a negative outlook on the ratings of four sovereigns and a stable outlook on three. Georgia is the only country whose government debt rating (Ba3) carries a positive outlook.

Although the CIS region's three net energy exporters -- Azerbaijan (Baa3 stable), Kazakhstan (Baa2 stable) and Russia (Ba1 negative) -- have low debt-to-GDP ratios and gross borrowing requirements, uncertainty around future oil prices and geopolitical concerns weigh on the credit quality of these countries, in Moody's view. High inflation in Russia and heightened strains on the banking sector in Russia and Kazakhstan are also signs of credit weakness.

However, Moody's expects that Azerbaijan and Kazakhstan are best placed among CIS countries to navigate the challenging macroeconomic conditions, as both have large reserve buffers and are not involved in the conflict in Ukraine.
According to Moody's, for the net energy importers -- Armenia (Ba3 negative), Belarus (Caa1 negative), Georgia, Moldova (B3 stable) and Ukraine (Ca negative) -- the recession in Russia will outweigh the beneficial effects of lower oil prices.

Moody's adds that high current account deficits and foreign-currency debt as a proportion of total government borrowings for all five net energy importers countries are credit negative. Georgia stands out with its low inflation and modest government debt burden. -0-