London, 31 May 2017 -- Moody's Investors Service, ("Moody's") has
today assigned a Ba3 rating to Samara, Oblast of (Samara) upcoming
RUB10 billion senior unsecured bond. Concomitantly we affirm the
Ba3 long-term issuer rating. The outlook remains stable.
RATINGS RATIONALE
The upcoming senior unsecured amortised bond (state number RU35013SAM0)
will have a fixed coupon rate and approximately seven years maturity.
The amortisation will start in 2020 whereby the region will have to repay
10% of the issue. The bond is direct, unconditional,
unsecured and unsubordinated obligation of the issuer, ranking pari
passu with all its other unsecured and unsubordinated debt. The
new bond will be primarily used to refinance the maturing debt obligations.
The rating is assigned based on documentation received by Moody's
as of the rating assignment date. In the unlikely event that the
structure changes, Moody's will assess the impact that these
differences may have on the rating.
The affirmation of the issuer rating reflects 1) the adequate budgetary
performance, 2) the expected stabilisation of debt burden at the
moderate level and its relatively diversified maturity structure and 3)
the dynamic local economy. At the same time, the rating is
constrained by the relatively modest budgetary flexibility.
In 2016, Samara recorded an adequate performance with gross operating
balance accounting for 6% of operating revenues and fiscal deficit
accounted for 4% of total revenues. The net direct and indirect
debt was overall stable at 51% of operating revenues in 2016 up
from 49% in 2015 and we expect it to stabilise at around similar
levels in 2017.
WHAT COULD CHANGE THE RATING -- UP/DOWN
Changes of the rating of the bond will mirror changes in Samara's
long-term issuer rating. Samara's issuer rating could
benefit from upward changes in the sovereign rating as well as improvement
of its financial performance. Deterioration in the sovereign's
credit quality, and/or persistent deterioration in the credit metrics
of the region, could exert downward pressure on its ratings.
The bond issue required the publication of this credit rating action on
a date that deviates from the previously scheduled release date in the
sovereign release calendar, published on www.moodys.com.
The specific economic indicators, as required by EU regulation,
are not available for this entity. The following national economic
indicators are relevant to the sovereign rating, which was used
as an input to this credit rating action.
Sovereign Issuer: Russia, Government of
GDP per capita (PPP basis, US$): 26,490 (2016
Actual) (also known as Per Capita Income)
Real GDP growth (% change): -0.2% (2016
Actual) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 5.4%
(2016 Actual)
Gen. Gov. Financial Balance/GDP: -3.7%
(2016 Actual) (also known as Fiscal Balance)
Current Account Balance/GDP: 1.9% (2016 Actual) (also
known as External Balance)
External debt/GDP: 40.0% (2016 Actual)
Level of economic development: Moderate level of economic resilience
Default history: At least one default event (on bonds and/or loans)
has been recorded since 1983.
On 30 May 2017, a rating committee was called to discuss the rating
of the Samara, Oblast of. The main points raised during the
discussion were: The issuer's fiscal or financial strength,
including its debt profile, has not materially changed. The
new bond issue required assignment of the debt rating.
The principal methodology used in these ratings was Regional and Local
Governments published in January 2013. Please see the Rating Methodologies
page on www.moodys.com for a copy of this methodology.
The weighting of all rating factors is described in the methodology used
in this credit rating action, if applicable.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Vladlen Kuznetsov
Vice President - Senior Analyst
Sub-Sovereign Group
Moody's Investors Service Limited, Russian Branch
7th floor, Four Winds Plaza
21 1st Tverskaya-Yamskaya St.
Moscow 125047
Russia
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Mauro Crisafulli
Associate Managing Director
Sub-Sovereign Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454