Fitch assigns Republic of Sakha's (Yakutia) 2.5 bln ruble bond 'BBB-(EXP)'
LONDON/MOSCOW. April 23 (Interfax) - Fitch Ratings has assigned the Russian Republic of Sakha's (Yakutia) upcoming 2.5 billion ruble domestic bond issue (ISIN RU000A0JTVM6), due 24 April 2018, an expected Long-term local currency rating of "BBB-(exp)" and an expected National Long-term rating of "AA+(rus)(exp)", the rating agency said in a press release.
"The final rating is contingent upon the receipt of final documents conforming to information already received," the press release says.
The bond represents a senior and unsecured obligation of the Russian Republic of Sakha's (Yakutia). Fitch considers the ratings of the bond to be linked to the Long-term local currency rating and National Long-term rating of the Republic of Sakha (Yakutia). The region has Long-term local and foreign currency ratings of "BBB-" and a National Long-term rating of "AA+(rus)". The Long-term ratings have Stable Outlooks. The region's Short-term foreign currency rating is "F2", it says.
Fitch forecasts Sakha will maintain a sound budgetary performance with a strong operating margin at about 16% in 2013-2014 driven by continued economic growth.
The agency expects the region's direct risk to remain low at about 10 billion rubles in absolute terms and at about 10% of current revenue in 2013. Sakha's debt coverage ratio (direct risk/current balance) will be exceptionally strong at below one year in 2013-2014.
Sakha is Russia's largest region by area situated in Siberia and is rich in natural resources. It accounts for 0.7% of the national population and 1% of the national GDP.
The bond has a fixed step-down coupon to be determined on April 24, 2013, the day of placement. The principal will be amortized by 10% of the initial bond issue value on 21 October 2015 and by 20% of the initial bond issue value on October 19, 2016, April 19, 2017 and October 18, 2017. The remaining 30% of the initial bond issue value will be repaid on April 24, 2018, according to the press release.
The proceeds from the new bond will be used to finance the region's capital expenditure and the repayment of maturing debt.
