NEW YORK. January 21./TASS/ International rating agency Moody's downgraded the ratings of seventeen Russian regions and cities and three government-related emitents on Tuesday. All have been put on review for potential further downgrade.
Moody's has also put Moscow Region and Mordovia for a downgrade review, due to possible worsening of their credit abilities under a rising risk.
These rating actions follow the weakening of Russia's credit profile as captured by the downgrade of Russia's government bond rating to Baa3 (review for downgrade) from Baa2 (negative) on 16 January 2015," the rating agency said in a statement.
The regions that received the downgrade are Khanty-Mansiysk, Samara, Chuvashia, Krasnoyarsk, Komi, Omsk, Nizhniy Novgorod, Krasnodar, Belgorod, Mordovia and Vologda. Also three cities Krasnodar, Omsk and Volgograd received the lowered rating.
Moody's attributed the downgrade of Krasnodar and Belgorod regions to their “significant deterioration of their performances during the last several years, which will make them increasingly vulnerable to the growing systemic risk". "Such weaknesses are reflected in the regions' poor budgetary performances and high debt levels," the agency said in the report.
They go on to say that "the downgrade of the ratings of 14 Russian regional and local governments (RLGs) reflects the increase in systemic risks following the weakening of Russia's credit profile, as captured in the downgrade of the government bond rating.” The higher systemic risk is reflected in the deterioration of the operating environment in Russia as Moody's expects Russian GDP to contract by 5.5% in 2015 and 3% in 2016, the agency said in a statement.