Moody's rates Moscow note Baa2

Moody's Investors Service said it assigned a Baa2 rating with a stable outlook to the new €408 million loan participation notes issued by Dresdner Bank AG for the sole purpose of funding a loan to the Russian City of Moscow.

Moody's said the transaction is primarily for refinancing purposes.

Debt service obligations on the notes are to be supported exclusively by payments received from the Moscow under the loan agreement with Dresdner Bank. Moscow's obligations under the loan agreement rank pari passu with all of its other senior unsecured and unsubordinated debts, the agency said.

The Baa2 rating reflects Moscow's diversified and buoyant economy, high degree of expenditure flexibility and high operating surpluses, which allow it to finance a large part of its capital program through its own sources and keeps debt financing at a moderate level. Moody's said the ratings also reflect Moscow's significant infrastructure need, growing debt and limited flexibility of revenues.

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