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June 7 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned the city of Moscow’s RUB19.7bn domestic bond issue, due on 1 June 2016, within a total registered RUB40bn bond issue series 67 (ISIN RU000A0JTXW1) a Long-term local currency rating of ‘BBB’ and a National Long-term rating of ‘AAA(rus)'.
The bond represents a senior and unsecured obligation of the city of Moscow. The bond has bullet repayment on 1 June 2016 and has six coupon periods. The coupon is fixed at 7% per annum. The proceeds from the new bond will be used to finance the city’s maturing debt and budget deficit.
The city of Moscow has Long-term foreign and local currency ratings of ‘BBB’, a National Long-term rating of ‘AAA(rus)’ and a Short-term foreign currency rating of ‘F3’. The Outlooks on the Long-term ratings are Stable.
The ratings reflect Moscow’s capital status, its robust wealth and economic indicators, sound budgetary performance, capex flexibility and strong debt ratios. The ratings also factor in potential expenditure pressure stemming from the city’s territorial expansion.
The city has a strong, service-oriented economy and its population accounts for 8.3% of the national total. Moscow contributed about 22% of Russia’s GDP and per capita gross city product was 2.7x the national average in 2011, making the city one of the wealthiest regions in the country.
The issue’s rating would be sensitive to any movement in the city of Moscow’s Long-term local currency rating.
A credit analysis on the city of Moscow is available on www.fitchratings.com.