Fitch rates Kirovskaya bond BBB(rus)

Fitch Ratings said it assigned a BBB(rus) national long-term rating to the Russian Kirovskaya Oblast's issue of RUB600 million domestic bond with a maturity of three years. The region's other ratings are long-term foreign- and local-currency debt B, short-term B and national long-term BBB(rus).

The outlook is stable.

The agency said the ratings reflect the region's strong industrial base, which serves as the main driver of economic growth and tax revenue increase, and its moderate debt burden on the budget. The region's debt burden is estimated to reach 14.8% of current revenue in 2006, while the debt servicing is estimated to reach 7.9% of current revenue in 2006.

The ratings also take into account the low proportion of tax revenues, which has been stable at an average of just under 50% of the overall budgetary revenue over the last five years, and the region's high expenditure rigidity with protected spending items (such as social expenditure and transfers) reaching 66% of total expenditure and a historically low share of capital expenditure, the agency said.

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