July 2, 2012 / 11:56 AM / 5 years ago

TEXT-S&P drops Vologda Oblast 'B' rating at issuer's request

(The following statement was released by the rating agency)

July 02 -

Rating Action

On July 2, 2012, Standard & Poor's Ratings Services affirmed its 'B' long-term issuer rating and 'ruA' Russia national scale rating on Russia's Vologda Oblast. The ratings were subsequently withdrawn at the issuer's request. At the point of withdrawal, the outlook was stable.

At the same time, we affirmed and then withdrew our 'B' and 'ruA' issue ratings and '3' recovery rating on the oblast's RUB2.51 billion bond.

Rationale

The ratings were constrained by revenue volatility as a result of high exposure to the steel industry, low revenue and spending flexibility, and weak budgetary performance, in turn leading to debt accumulation and mounting debt service. They were, however, supported by the high likelihood of strong federal support and the oblast's own modest contingent liabilities.

At the point of withdrawal, the stable outlook reflected our view that additional support from the federal government and management's cost-containment agenda for 2012 would counterbalance what we believed would be an only modest recovery of tax and nontax revenues over the medium term.

Related Criteria And Research

Methodology For Rating International Local And Regional Governments, Sept. 20, 2010

Ratings List

Ratings Affirmed And Withdrawn

To From

Vologda Oblast

Issuer Credit Rating NR/NR B/Stable/--

Russia National Scale NR/NR ruA/--/--

Senior Unsecured NR B

Senior Unsecured NR ruA

Recovery Rating NR 3 3

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