State Debt Committee
of the City of Moscow

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Credit History of the City of Moscow (permalink )

External Debt Ratings of the City

The City has a strong credit history in relation to its foreign debt liabilities. In early 1997, the City received a foreign debt rating of “Ba2” from Moody’s Investors Service (“Moody’s”) and “BB” from Standard & Poor’s, which were also the foreign debt ratings from Moody’s and Standard & Poor’s for the Russian Federation. In March 1998, Moody’s and, in June 1998, Standard & Poor’s downgraded the foreign debt rating of the Russian Federation to “Ba3” and “B+”, respectively. According to the rating agencies, the foreign debt rating of each Subject of the Russian Federation, including the City, is limited by the foreign debt rating of the Russian Federation. The City’s foreign debt rating was downgraded accordingly to “Ba3” and “B+” by Moody’s and Standard & Poor’s, respectively. In the aftermath of the Russian economic crisis, the Russian Federation’s foreign debt rating from Moody’s and Standard & Poor’s fell from “B1” to “B3” and from “B+” to “CCC”, respectively. The City’s foreign debt rating was downgraded accordingly to “B3” and “CCC” by Moody’s and Standard & Poor’s, respectively. The City’s foreign debt rating from Standard & Poor’s in September 1998 and from Moody’s in March 1999 was “CCC-” and “Caa1” respectively.

Following the recovery in the Russian economy in 1999, Standard & Poor’s upgraded the City’s foreign debt rating from “CCC-” to “CCC+” in April 2000 and from “CCC+” to “B-” in December 2000. In December 2000, Moody’s upgraded the City’s foreign debt rating from “Caa1” to “B3”. The rating agencies cited the City’s increasing revenues, the reduction of its debt burden and the improved transparency of the City’s budget and finances as the reasons for the rating upgrades. In 2001, the rating agencies noted the efficient execution of the City’s budget, the City’s growing tax base, its efficient expenditure control and the successful repayment of its outstanding eurobonds. Fitch Ratings upgraded the foreign debt rating of the City from “CCC” to “B-” in March 2001, to “B” in October 2001 and to “B+” in December 2001. Standard & Poor’s upgraded its foreign debt rating of the City to “B” in June 2001, and to “B+” in December 2001. Moody’s upgraded the foreign debt rating of the City to “B2” in October 2001 and to “Ba3” in December 2001. In light of the further growth in the Russian economy, Fitch Ratings upgraded the City’s foreign debt rating to “BB-” in May 2002; Standard & Poor’s upgraded the City’s foreign debt rating to “BB ” in July 2002, and to “BB” in December 2002; and Moody’s upgraded the City’s foreign debt rating to “Ba2” in December 2002. In October 2003, Fitch Ratings upgraded the City’s foreign debt from “BB” to “BB+”. In 2003, Moody’s and Standard & Poor’s confirmed their foreign debt ratings on the City to be “Ba2” and “BB”, respectively.

In January 2004 and February 2004, Moody’s and Standard & Poor’s raised the City’s foreign debt ratings to “Ba1” and “BB+”, respectively. In November 2004, Fitch Ratings and Moody’s upgraded the City’s foreign debt ratings to the investment grade of “BBB-” and “Baa3”, respectively. Both rating agencies noted the City’s strong budget, its fully controlled debt burden and the continuing improvement of the City’s debt management. In February 2005, Standard & Poor’s raised the City’s foreign debt to the investment grade of “BBB “. In August 2005, Fitch Ratings raised the City’s foreign debt rating to “BBB” and in October 2005 Moody’s upgraded the City’s foreign debt rating to “Baa2”. In December 2005, Standard & Poor’s upgraded its rating on the City’s foreign debt to “BBB”. In July 2006, Fitch Ratings raised the City’s foreign debt rating from “BBB” to “BBB+” noting the continued growth in Moscow’s strong and dynamic local economy, supported by further improvements in Russia’s economy, growing tax revenues, large current surpluses and a high capacity for debt financing, and in September 2006 Standard & Poor’s upgraded the City’s foreign debt from “BBB” to “BBB+”. In December 2006, as a result of the application by Moody’s of its new Joint-Default Analysis rating methodology for regional and local governments, the rating on the City’s foreign debt was revised from “Baa2” to “Baa1” with a stable outlook, which was one notch above the foreign debt rating of the Russian Federation.

In 2007, the City's foreign debt ratings remained unchanged. In March 2008, Standard & Poor's revised its outlook on the City's foreign debt rating to "positive" from "stable", which indicated that the rating might be upgraded in the near future. However, in autumn 2008, estimating the impact of the global crises on the City’s economy the agencies Fitch Ratings and Standard & Poor’s changes their outlooks on the City’s foreign ratings to negative from stable. In December 2008, Standard & Poor’s downgraded the City’s foreign debt by one notch to “BBB” with negative outlook. At same time Moody’s did not change its rating on the City’s debt and kept it at “Baa1” with a stable outlook.

In February 2009, Fitch Ratings downgraded the City’s foreign debt by one notch to “BBB” with negative outlook. The other two agencies – Moody’s and Standard & Poor’s did not change their ratings on the City’s foreign debt in 2009.

At present Moscow is the only Russian subject which foreign debt is rated by all three agencies on a par with the debt of the Russian Federation.

Internal Debt Ratings of the City

In June 1998, Moody’s assigned the City an internal debt rating of “Ba3”. Since then the foreign and internal debt ratings have changed simultaneously. After the crises in 1998, Moody’s downgraded the City’s internal debt by three notches to “B3”. At the same time the internal debt rating of the Russian Federation was downgraded to “Ca”. In March 1999, the City’s rating fell to its lowest level of “Caa1”. In December 2000, Moody’s upgraded the City’s debt to “B3”. In Q4 2001, the agency revised its rating on the City twice and by the year end Moscow’s internal rating was brought up to “Ba3”. In December 2002, Moody’s upgraded the City’s internal debt to “Ba2”. In January, 2004 Moody’s upgraded the City’s internal debt rating to “Ba1” and in November revised it to the investment grade of “Baa3”. According to Moody’s, the rating was supported by the City’s growing economy, strong budget and the capacity for debt financing. In October 2005, Moody’s further upgraded the City’s internal debt to “Baa2”. In December 2006, following the adoption by Moody’s of the new Joint-Default Analysis rating methodology for regional and local governments, the City’s internal debt rating was revised from “Baa2” to “Baa1”, which was one notch above the internal debt rating of the Russian Federation. Since 2006, Moody’s has not changed its rating on internal debt obligations of Moscow which at present stands at “Baa1” with a stable outlook.

In autumn 2007, Standard & Poor’s assigned the “BBB+” credit rating to the City’s internal debt. In 2008, the agency revised the outlook on the rating from stable to negative and in December 2008 downgraded the City’s internal debt by one notch to “BBB”. Since December 2008, the agency has not changed its rating on the internal debt of Moscow which at present stands at “BBB” with a stable outlook.

In December 2001, Fitch Ratings assigned the internal debt rating of “B+” to the City, which was one notch higher than the rating of the internal debt of the Russian Federation. In May 2002, Fitch Ratings upgraded the internal debt of Moscow to “BB-”. The agency revised the City’s internal debt rating from “BB-” to “BB” in May 2003 and to “BB+” in October 2003. In November 2004, Fitch Ratings raised its rating on the City’s internal debt to the investment grade rating of “BBB-” and in August 2005 upgraded it to “BBB”. In July 2006, the agency further upgraded the City’s internal debt to “BBB+” noting the continued growth in Moscow’s strong and dynamic economy, supported by further improvements in Russia’s economy, growing tax revenues, large current surpluses and a high capacity for debt financing. In 2007 and 2008, Fitch Ratings did not change the rating of Moscow’s internal debt obligations. In November 2008, the agency revised the rating outlook from stable to negative. In February 2009, taking into account the impact of the global crises on Moscow’s economy, Fitch Ratings downgraded the City’s internal debt by one notch to “BBB”. At present the rating of internal debt obligations of Moscow from Fitch Ratings stands at “BBB” with a negative outlook.

All negative rating actions taken by the rating agencies in 2008 and 2009 on external and internal debt of the City of Moscow followed by the similar negative rating actions taken them in respect to debt obligations of the Russian Federation.