Fitch rates Komi bond A(rus)

Fitch Ratings said it assigned the Russian Republic of Komi's issue of Russian ruble 1 billion domestic bond with maturity of 10 years a national long-term A(rus) rating. The region is rated international long-term B+ and national long-term A(rus).

The outlook is positive.

The rating reflects Komi's improved budgetary performance due to good economic growth in 2004 and 2005 and Fitch's expectations that this trend, despite overall spending pressures, will continue. It takes into account the recovery of Komi's operating performance and improved debt structure with foreign debt and federal loans being steadily replaced by cheaper and longer-maturity ruble bonds.

However, its high dependency on the primary sector results leaves its budget performance vulnerable to commodity price fluctuations and low capital expenditure (7.3% in 2004) limits infrastructure development, the agency said.

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