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Moody’s downgrades Russian sub-sovereigns
Moody's Investors Service said it downgraded the cities of Moscow and St. Petersburg to Ba1 from Baa3; the Republic of Bashkortostan, the Autonomous-Okrug of Khanty-Mansiysk, Tatarstan, SUE Vodokanal and OOO Vodokanal Finance to Ba2 from Ba1; Samara Oblast and OJSC Western High-Speed Diameter to Ba3 from Ba2; the Oblast of Belgorod, the Komi Republic, Krasnodar krai, the City of Krasnodar, Krasnoyarsk krai, and the Oblast of Nizhniy Novgorod to B1 from Ba3 and the Republic of Mordovia, the City of Volgograd and the Oblast of Volgograd to B2 from B1.
The agency affirmed the Oblast of Moscow at Ba2, the Chuvashia Republic at Ba3, the Oblast of Omsk at Ba3 and City of Omsk at B1.
The Republic of Tatarstan is on review for downgrade. For the remaining issuers, this concludes the review for downgrade that began Jan. 20, and the outlook is negative.
These rating actions follow the weakening of Russia's credit profile as captured by the downgrade of the sovereign government bond rating to Ba1 (negative) from Baa3 (review for downgrade) on Feb. 20.
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.
The confirmation of Moscow Oblast, the Chuvashia Republic, the Oblast of Omsk and the City of Omsk reflects these entities' capacity to maintain credit profiles in their rating categories despite growing systemic pressures, Moody’s said.
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