MOSCOW, October 22 (RIA Novosti) – International credit rating agency Moody's has downgraded its ratings of two major Russian cities, Moscow and St. Petersburg, from Ваа2 to Ваа1 due to market risks and a declining operating environment, with the outlook being negative, the agency said in a press release Tuesday.
"Both cities are exposed to market risks and on-going deterioration in the operating environment," Moody's says of downgraded Moscow and St. Petersburg. Explaining the factors underpinning these conclusions, the rating agency stated that the downgrade of both cities was owing to "their strong institutional links with the federal government and their lack of special status, which prevents them from being rated above the sovereign," as stated in the release.
Apart from changes to Moscow and St. Petersburg's ratings, some state-run enterprises were also downgraded. Vodokanal of St. Petersburg and Vodokanal-Finance were downgraded from Ваа2 to Ваа3. St. Petersburg's Western High Speed Diameter was also downgraded, from Ваа3 to Ваa1, with a negative outlook.
Moody's also changed the outlook of Russian regional and local governments to negative from stable. Specifically, this change occurred for the Republic of Bashkortostan, Republic of Tatarstan, Khanty-Mansi Autonomous Area, Samara Region, Chuvash Republic, Krasnoyarsk Territory, Komi Republic, Omsk Region, Nizhny Novgorod Region, as well as the cities of Krasnodar, Omsk and Volgograd.
The latest review follows Russia's credit rating being cut by one notch to Baa2 from Baa1 last Friday, seen as a result of ongoing Ukrainian crisis and sanctions imposed on Russia by the Western countries.