(The following statement was released by the rating agency)
MOSCOW, June 06 (Fitch) Fitch Ratings has affirmed the Russian
Region's Long-term foreign and local currency Issuer Default
Ratings (IDRs) at
'BB+', Short-term foreign currency IDR at 'B' and National
Long-term rating at
'AA(rus)'. The Outlooks on the Long-term IDRs and the National
Krasnoyarsk region's outstanding senior unsecured domestic bonds
have also been
affirmed at 'BB+' and 'AA(rus)'.
KEY RATING DRIVERS
Fitch expects Krasnoyarsk region's operating performance to
operating surpluses to be restored to about 3% of operating
revenue in 2014 and
up to 8%-12% in 2015-2016. The region recorded an operating
deficit at 1% of
operating revenue in 2013 due to changes in the fiscal regime
operating expenditure. The region's deficit before debt
variation widened to 23%
of total revenue in 2013 from 17% in 2012, but Fitch expects to
reverse over the medium term.
New fiscal regulation enacted in 2013 allowed large corporations
consolidated groups of taxpayers, equalise net financial results
advanced deprecation, resulting in tax revenue contraction of
1% yoy The
federal government's 2012 election pledges to raise public
sector salaries and
fund other social programmes led to a 12% yoy increase of
in 2013. Those factors are likely to continue to pressure
over the medium term.
The region's capital outlays decreased to 19% of total
expenditure in 2013,
after averaging 28% in 2009-2012 as a result of large-scale
expects Krasnoyarsk region to maintain capex at about 15% of
total spending in
the medium term.
Fitch expects continued growth in Krasnoyarsk region's direct
risk, up to 45% of
current revenue in 2014 and 50% by end-2016, from 35% in 2013.
The 2013 debt
stock comprised 73% domestic bonds, 19% bank loans and 8%
federal budget loans.
The region placed a new bond of RUB10bn in May 2014 to meet its
needs on maturing debt.
As expected Krasnoyarsk region materially depleted its cash
holdings to RUB4.7bn
in 2013 (2012: RUB17.6bn) to fund its budget deficit. Cash held
totalled RUB6.3bn as of the beginning of May 2014, which fully
2014 interest costs.
The region's administration expects moderate growth in the local
about 2%-3% in 2014-2016. Economic growth in the region is
underpinned by the
development of power generation, oil and other natural resources
metallurgy sectors. The region's strong industrial profile
above-national average wealth metrics.
Continued increase in debt to above 50% of current revenue,
accompanied by a
weak operating margin below 5% in the medium term, would lead to
pressure on the ratings.
An upgrade is not likely under our baseline scenario, but could
consistently sound budgetary performance with an operating
margin above 10%,
leading to direct risk at below 30% of current revenue on a
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Fitch Ratings CIS Ltd
26 Valovaya Street
+7 495 956 7064
+49 69 76 807 6111
Media Relations: Julia Belskaya von Tell, Moscow, Tel: +7 495
956 9908, Email:
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Additional information is available on www.fitchratings.com.
Applicable criteria, 'Tax-Supported Rating Criteria', dated 14
August 2012, and
'International Local and Regional Governments Rating Criteria
States', dated 23 April 2014, are available on
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
International Local and Regional Governments Rating Criteria -
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