S&P rates Magadan Oblast bond BB-

Standard & Poor's said it assigned its BB- long-term global scale rating and ruAA- Russia national scale rating to the RUB 1 billion (about $18 million) four-year amortizing senior unsecured bond to be issued by Russia's Magadan Oblast (BB-/stable/--; ruAA-/--/--) by year-end 2014.

The ratings on the bond mirror those on the oblast.

The bond will have fixed-rate coupons and an amortizing repayment schedule. According to the planned redemption schedule, 30% of the bond is to be repaid in 2016, 30% in 2017 and the remaining 40% in 2018.

S&P said the ratings are constrained by its view of Russia's volatile and unbalanced institutional framework, which contributes to Magadan's very weak budgetary flexibility.

Owing to these system constraints, the agency views Magadan's financial management as weak in an international context, mirroring its view for most Russian local and regional governments.

Despite its wealth above the Russian average, Magadan's economy is weak, in our view, because of its heavy concentration on mining precious metals. The oblast's weak budgetary performance also constrains the ratings.

The ratings are supported by S&P’s view of the oblast's adequate liquidity, low debt and low contingent liabilities, the agency said.

© 2015 Prospect News.
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