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S&P: City of Moscow Proposed RUR15 Billion Bond Rated 'BBB'
19:58
MOSCOW (Standard & Poor's) April 14, 2009--Standard & Poor's Ratings Services said today that it had assigned its 'BBB' local currency long-term debt rating to the proposed Russian ruble (RUR) 15 billion ($0.5 billion) four-year senior unsecured bond to be issued by the City of Moscow (BBB/Negative/--).
"The ratings on the bond mirror those on the city," said Standard & Poor's credit analyst Felix Ejgel.
The issue, to be placed on April 15, 2009, will have eight semiannual coupon payments. The first seven coupons have an interest rate of 8% per year each, and the eighth has a 7% interest rate. The bond falls due in September 2012.
The rating on Moscow, capital of the Russian Federation (foreign currency BBB/Negative/A-3; local currency BBB /Negative/A-2; Russia national scale 'ruAAA') reflects its position as Russia's economic, administrative, and financial center, as well as its diverse, service-based economy, with wealth levels well above the national average. The city's currently low debt service, within 5% of total revenues until 2015; cautious debt management; and consistently strong performance also support the rating.
The rating is constrained by limited predictability and flexibility of budgetary policies due to a weak--although improving--institutional framework, emerging long-term planning, and pressing infrastructure development needs. For further information on the City of Moscow, please see the full analysis published on Dec. 30, 2008.
We consider Moscow's liquidity to be adequate.
"The city maintains good access to bank funding and had accumulated cash reserves of about RUR175.2 billion as of March 1, 2009, which exceeded the city's debt service in 2009 by 4.5x," said Mr. Ejgel.
Although foreign currency debt represented almost 26% of the city's direct debt in 2008, exposure to foreign currency risk is minimal, due to the gradual debt repayment profile.
