Fitch downgrades Khakassia

Fitch Ratings said it downgraded Russian Republic of Khakassia's long-term foreign- and local-currency issuer default ratings to B+ from BB-.

The outlook is stable.

The short-term foreign-currency issuer default rating was affirmed at B.

Khakassia's outstanding senior unsecured domestic bonds also were downgraded to B+ from BB-.

The downgrades reflect the republic's fiscal performance in 2016, which was worse than expected, along with sharp growth of direct risk to more than 100% of current revenue and persistent refinancing pressure with more than two-thirds of debt stock due in 2017 to 2019, Fitch said.

The downgrades also consider its debt burden, which sharply increased in 2016, the agency added.

The increase was fueled by an extremely high budget deficit, which accounted for 33% of total revenue in 2016 compared with an already high average of 18% in 2013 to 2015, Fitch said.

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