YEREVAN, FEBRUARY 25, ARMENPRESS: Moody's Interfax Rating Agency has today downgraded the national scale ratings of 13 Russian regions and municipalities and 1 government-related entity. At the same time, it confirmed the ratings of 3 Russian regions and 1 city. This concludes the review for downgrade of these ratings that was initiated on 21 January 2015, Armenpress reports, citing the Moody's Interfax.

These rating actions follow the weakening of Russia's credit profile as captured by Moody's downgrade of Russia's government bond rating to Ba1 (negative outlook) from Baa3 (review for downgrade) on 20 February 2015.

Moody's Interfax has downgraded the national scale ratings of the City of Moscow, City of St. Petersburg, SUE Vodokanal of St. Petersburg, Autonomous-Okrug (region) of Khanty-Mansiysk, Samara Oblast, Republic of Komi, Krasnodar Krai, Krasnoyarsk Krai, Belgorod Oblast, Oblast of Nizhniy Novgorod, Vologda Oblast, Republic of Mordovia, City of Krasnodar and City of Volgograd.

The downgrade of SUE Vodokanal of St. Petersburg reflects its status as a government-related entity that is fully owned by the St. Petersburg government.

The downgrade of the ratings of 13 Russian regional and local governments (RLGs) reflects Moody's assessment of the increase in systemic risks following the weakening of Russia's credit profile, as captured in the downgrade of the sovereign bond rating. Moody's expects Russia's economy to contract in 2015-16 due to the combined effect of the ongoing crisis in Ukraine and the collapse in oil prices and the exchange rate on Russia, which will likely affect its economic strength as well as the functioning of its financial markets. As a result, Russian regions will face increasing pressure on their financial fundamentals while higher borrowing costs could potentially heighten refinancing and liquidity risks.