Fitch affirms Karelia

Fitch Ratings said it affirmed the Russian Republic of Karelia's long-term foreign- and local-currency ratings at BB-, along with its national long-term rating at A+(rus) and short-term foreign-currency rating at B.

The outlook is stable.

The affirmations reflect an expectation of a stable operating performance at about 10% over the medium term, despite volatility due to high tax concentration and a manageable level of direct risk, Fitch said.

The agency noted that an improvement in the operating margin to more than 10% and stabilization of direct risk at less than 40% of current revenue in the medium term would be positive for the rating.

Conversely, a sharp deterioration of operating performance leading to significant worsening of debt and debt coverage ratios would lead to downward rating pressure, the agency said.

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