S&P ups Leningrad view to positive

Standard & Poor's said it revised its outlook on Leningrad Oblast to positive from stable, following rapid revenue growth. At the same time, the B+ foreign currency issuer credit rating and ruA+ Russia national scale rating on Leningrad were affirmed.

The ratings on Leningrad reflect the Oblast's continued fast economic expansion and moderate debt, the agency said.

The ratings are constrained, however, by Leningrad's low revenue flexibility due to federal controls, relatively weak financial performance and growing operating expenditure pressures.

Leningrad suffers from low flexibility of both revenues and expenditures, as federal legislation sets tax rates, types and shares, the agency said. Consequently, the oblast, like other Russian regions, is exposed to possible changes in federal tax and budget legislation.

As a positive credit feature, Leningrad's economy is rapidly developing. Average annual growth of at least 5% to 6% is conservatively estimated for 2005-2007, supported by the location of the oblast, which lies on the main trade route to the European Union in the Baltic region.

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