MOSCOW, December 12 (Fitch) Fitch Ratings has affirmed Astrakhan
Long-term foreign and local currency ratings at 'B+', its
rating at 'A(rus)' and its Short-term foreign currency rating at
Outlooks on the Long-term ratings are Stable.
KEY RATING DRIVERS
The ratings reflect a high level of debt dominated by short-term
which impose significant refinancing pressure, and a high
concentration of the
region's tax base. However, the ratings also factor in the
direct risk and its sound budgetary performance supported by a
Fitch forecasts that the region's direct risk will remain at
below 60% of
current revenue in 2013-2015. Direct risk declined to 58% of
current revenue in
2012 from a high 68% in 2010. However in absolute terms direct
risk increased to
RUB15.7bn at end-2012 from RUB12.6bn at end-2010. The debt
(direct risk/current balance) remains weak at eight years,
the maturity profile of less than two years, and this is
reflected in the
ratings of the region.
Fitch considers the region's refinancing needs to be significant
as its debt
structure is dominated by short-term bank loans. Under Fitch's
base case the
region will not face difficulties in refinancing its loans in
2014. However, it
faces the risk of higher debt servicing cost if the financial
which would put pressure on the budget.
The region has low exposure to contingent risk. Guarantees
issued by the region
and the debt of public sector enterprises totalled RUB0.3bn at
amount represented less than 2% of the region's current revenue.
The region has
not issued new guarantees since 2010.
Fitch forecasts continued economic growth for the region at
about 8-10% annually
in real terms for 2013-2016. Development of vast offshore
Caspian Sea oil
resources of about 500 million barrels has boosted the local
economy. In 2012
12.7bcm of natural gas and 4.9 million tons of oil were
extracted from the
region. Extraction of natural resources increased 40.5% in 2012
Regional GDP increased 9.7% in real terms in 2012.
However, the region's per capita GDP in 2011 remained about 20%
lower than the
national average, although Fitch expects this to improve over
the medium term.
Fiscal concentration is high as top 10 taxpayers accounted for
about 50% of
Astrakhan region's total tax revenues.
A growing economy helped to lift the region's operating surplus
above 10% in
2011-2012 from a low 3% in 2010. Overall deficit (deficit before
variation/total revenue) shrank to 2% in 2012 from a high 20% in
2009. This was
achieved despite the federal government's move to raise public
which fuelled growth of operating expenditure. Fitch expects a
surplus at about 10% in 2013-2015.
Astrakhan region is located in the south-east part of European
Russia on the
Caspian shore. The region accounted for 0.4% of national GDP in
2011 and for
0.7% of the population.
Sound budgetary performance in line with Fitch expectations and
refinancing risk from a lengthening of the debt maturity profile
would lead to
Weak operating performance with close to zero operating
surpluses coupled with
further growth of short-term debt would lead to a downgrade.
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Fitch Ratings CIS Ltd
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+7 495 956 99 94
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Additional information is available at www.fitchratings.com.
Applicable criteria, 'Tax-Supported Rating Criteria', dated 14
August 2012, and
'International Local and Regional Governments Rating Criteria
States', dated 9 April 2013, are available on
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