Fitch assigns Karelia bond A(rus)

Fitch Ratings said it assigned the Republic of Karelia's forthcoming issue of 500 million Russian ruble domestic bond with a maturity of four years a national long-term A(rus) rating. The republic is rated long-term B+, national long-term A(rus) and short-term B.

The outlook is positive.

The positive outlook reflects Fitch's expectations of a recovery in budgetary performance in 2007 due to lower spending needs resulting from increased capital expenditure efficiency and high quality of management, Fitch said.

At the same time, the regional budget is characterized by high operating expenditure rigidity, the agency said.

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