Link to Fitch Ratings' Report: Krasnoyarsk Region - Rating
Action ReportMOSCOW, December 10 (Fitch) Fitch Ratings has revised the
Region's Outlooks to Stable from Positive and affirmed its
Long-term foreign and
local currency ratings at 'BB+'. The agency has also affirmed
National Long-term rating at 'AA(rus)' and its Short-term
rating at 'B'.
Krasnoyarsk Region's outstanding senior unsecured domestic bonds
RU000A0JRYP7, RU000A0JT8G7 and RU000A0JU5U1) of RUB33.3bn have
affirmed at 'BB+' and 'AA(rus)'.
KEY RATING DRIVERS
The revision of Outlook reflects the following rating drivers
and their relative
Fitch has revised down its forecast on Krasnoyarsk region's
performance, which is likely to remain negatively affected by
changes in the
fiscal regime enacted in 2012. The agency expects the region's
balance to be 8%-9% of operating revenue (11%-12% expected in
slowly recovering in 2014-2015 to 10%-12%. The operating margin
decreased to 7%
of operating revenue in 2012 (2011: 16.6%), while its deficit
variation widened to 16.6% of total revenue in 2012 (2011:
Fitch expects continued growth in the region's direct risk, up
to about 30% of
current revenue by end-2013, and close to 35% in 2014-2015.
issued a five-year domestic bond in October 2013 and contracted
bank loans to
finance its budget deficit; its direct risk increased to
RUB42.6bn as of 1
November 2013 (2012: RUB27.4bn).
Fitch also expects the region to continue to see its cash
gradually depleted during 2013-2015. Its interim cash reserves
fell to RUB13.8bn
as of 1 November 2013 from RUB17.6bn in 2012 and RUB27.6bn in
2011. The region
terminated its cash deposits in commercial banks in 1H13.
The region's administration expects the region's economy to
expand 2%-3% in
2013-2015. Economic growth in the region is underpinned by the
and non-ferrous metallurgy sectors. The region's strong
supports above-national average wealth metrics.
Taxation represented 85.9% of Krasnoyarsk region's operating
revenue in 2012
(2011: 85.5%). The region's tax base remains concentrated as the
taxpayers accounted for 48% of proceeds in 2012 (2011: 56%). The
is likely to remain exposed to fiscal changes and/or volatile
business cycles in
the primary sectors in the medium term.
Krasnoyarsk region's ratings also reflect the following rating
Krasnoyarsk region funded sizeable capital outlays in 2012
amounting to 27% of
total spending. The region's self-financing capacity decreased
in 2012 with
current balance and capital revenue covering only 48.6% of capex
Fitch expects the region to maintain capex at about 20%-25% of
total spending in
the medium term.
Consistently sound budgetary performance with an operating
margin above 10%
leading to direct risk at below 30% of current revenue on a
would be positive for the ratings.
Continued increase in debt to above 50% of current revenue,
accompanied by a
weaker operating margin below 5% in the medium term, would lead
pressure on the ratings.
Russia has an evolving institutional framework with
between federal, regional and local governments still under
However, Fitch expects Krasnoyarsk Region will continue to
receive a steady flow
of earmarked transfers from the federation.
The region will continue to have fair access to domestic
financial markets to
enable it to refinance maturing debt.
Krasnoyarsk Region will continue to benefit from the revenue
by a strong industrial base and natural resource endowment. The
will continue to demonstrate modest economic growth.
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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 dated 9 April 2013, are available on
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