S&P rates Sakha bond BB

Standard & Poor's said it assigned a recovery rating of 3 to the Russian Republic of Sakha's planned five-year amortizing RUB 2.5 billion bond.

The recovery rating indicates 50% to 70% expected recovery in a default.

The agency also said it assigned a BB and ruAA senior unsecured debt ratings to the proposed bond, mirroring the issuer ratings on Sakha.

The bond will have 20 quarterly step-down coupons and an amortizing repayment schedule. In 2014, 10% of the bond is scheduled for redemption, a further 30% is to be repaid in 2015, 30% in 2016 and the remaining 30% in 2017.

The ratings reflect the republic's dependence on federal decisions regarding intergovernmental relations, expenditure responsibilities and tax regimes, S&P said.

The ratings are constrained by the high concentration of Sakha's economy in natural resources extraction and exposure to the volatility of world commodity markets, which is exacerbated by dependence on a few large taxpayers, the agency said.

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