S&P rates Oblast of Moscow bonds

Standard & Poor's said it assigned its ruA+ Russia national scale rating to the proposed Russian ruble 9.6 billion senior unsecured bonds to be issued by the Oblast of Moscow (foreign currency B+/positive/--; Russia national scale rating ruA+).

S&P said the rating on the bond is equalized with the national scale rating on the Oblast. The issue will be placed on April 27. It will have 18 coupon payments of 11% per year each and a five-year maturity.

"The Moscow Oblast continues to accumulate its debt, which will double in 2004. Direct debt, however, is unlikely to exceed a manageable 45% of operating revenues in the next three to four years," said S&P credit analyst Felix Ejgel.

Debt accumulation is mitigated by an improved debt-monitoring system and longer debt maturities. Long-term debt is expected to make up 80% of total debt in 2004, compared with only 53% in 2002 and none in 2001.

The ratings on the Oblast also incorporate its limited financial flexibility as a result of the federal control over much of the Oblast's revenues and expenditures, and high financing needs.

The ratings on the Moscow Oblast are supported by its proximity to the City of Moscow (foreign currency BB+/stable/--), which has resulted in rapid economic growth in the food industry, trade, and recreation sectors, and should lead to an increase in budgetary revenue.

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