Moody’s downgrades Russian sub-sovereigns

Moody's Investors Service said it downgraded the cities of Moscow and St. Petersburg to Baa3 from Baa2; the Republic of Bashkortostan, the Autonomous-Okrug of Khanty-Mansiysk, the Republic of Tatarstan, SUE Vodokanal and OOO Vodokanal Finance to Ba1 from Baa3; Samara Oblast and OJSC Western High-Speed Diameter to Ba2 from Ba1; the Oblast of Belgorod, the Chuvashia Republic, the Komi Republic, Krasnodar krai, the City of Krasnodar, Krasnoyarsk krai, the Oblast of Nizhniy Novgorod and the Oblast of Omsk to Ba3 from Ba2 and the City of Omsk, the City of Volgograd and the Oblast of Volgograd to B1 from Ba3.

The ratings were placed on review for downgrade, along with the Ba2 issuer rating of the Oblast of Moscow and the B1 issuer and debt ratings of the Republic of Mordovia.

These rating actions follow the weakening of Russia's credit profile as captured by the downgrade of the sovereign government bond rating to Baa3 (review for downgrade) from Baa2 (negative) on Jan. 16.

The agency said the downgrades of Moscow and St. Petersburg reflect their strong institutional links with the federal government and lack of special status, which prevents them from being rated above the sovereign.

The downgrades of Vodokanal and Western High-Speed Diameter reflect their status as government-related issuers that are fully owned by the St. Petersburg government, Moody’s said.

The remaining downgrades reflect the increase in systemic risks following the weakening of Russia's credit profile, the agency said.

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