Cities of Moscow and St. Petersburg Long-Term Ratings Raised to 'BB'; Outlooks Stable
Dec 10, 2002
LONDON (Standard & Poor's) Dec. 6, 2002--Standard & Poor's Ratings Services said today it raised its long-term issuer credit ratings on the Russian cities of Moscow and St. Petersburg to 'BB' from 'BB-'. The outlooks are stable.
The rating actions follow Standard & Poor's raising of its foreign currency ratings on the Russian Federation to 'BB' from 'BB-'. The upgrade reflects a three-year-old political commitment to prudent policies that has provided financial predictability and increased the likelihood that Russia's responsible economic management will continue through future political transitions.
The economic growth and financial stability of Moscow and St. Petersburg are closely linked to that of the sovereign. "Both cities have continued to benefit from the overall improvement in Russia and are experiencing sustained economic growth, boosting their liquidity and tax revenues," said Standard & Poor's Public Finance credit analyst Elena Okorotchenko. The cities' debt burdens are low by international standards, at less than 30% of operating revenues. Their performance will nonetheless continue to be affected by the ongoing intergovernmental reform within Russia, which, among other things, has led to significant changes in the structure of tax revenues and equalization mechanisms, and limits revenue predictability and flexibility. Other important risks include foreign currency exposure and large infrastructure financing needs.
"The stable outlooks reflect Standard & Poor's expectation that the cities will continue to show sound financial performance, manageable debt, and improvement in their management and control systems," said Ms. Okorotchenko.
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.
The rating actions follow Standard & Poor's raising of its foreign currency ratings on the Russian Federation to 'BB' from 'BB-'. The upgrade reflects a three-year-old political commitment to prudent policies that has provided financial predictability and increased the likelihood that Russia's responsible economic management will continue through future political transitions.
The economic growth and financial stability of Moscow and St. Petersburg are closely linked to that of the sovereign. "Both cities have continued to benefit from the overall improvement in Russia and are experiencing sustained economic growth, boosting their liquidity and tax revenues," said Standard & Poor's Public Finance credit analyst Elena Okorotchenko. The cities' debt burdens are low by international standards, at less than 30% of operating revenues. Their performance will nonetheless continue to be affected by the ongoing intergovernmental reform within Russia, which, among other things, has led to significant changes in the structure of tax revenues and equalization mechanisms, and limits revenue predictability and flexibility. Other important risks include foreign currency exposure and large infrastructure financing needs.
"The stable outlooks reflect Standard & Poor's expectation that the cities will continue to show sound financial performance, manageable debt, and improvement in their management and control systems," said Ms. Okorotchenko.
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.