S&P downgrades Vologda

Standard & Poor's said it lowered the long-term issuer credit rating on Russia's Vologda Oblast to B from B+.

The agency also said it lowered the Russia national scale rating on the oblast to ruA from ruA+.

The ratings on the oblast's debt also were lowered to B/ruA from B+/ruA+. The recovery rating remains at 3, indicating 50% to 70% expected recovery in a default.

The downgrades reflect the oblast's inability to implement budget consolidation measures in 2011, which led to a budgetary performance, debt and liquidity position in line with the downside scenario, S&P said.

The outlook is stable.

The ratings are constrained by revenue volatility stemming from its high concentration in the steelmaking industry, low revenue and spending flexibility and weak budgetary performance, the agency said.

The ratings are supported by the high likelihood of stronger federal support and Vologda Oblast's modest contingent liabilities, S&P said.

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