Fitch Ratings-Moscow/London-11 May 2018: Fitch Ratings affirmed the Russian Tyumen Region’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) at ‘BBB-’ with Positive Outlooks and Short-Term Foreign-Currency IDR at ‘F3’.
The affirmation of ratings of the Tyumen region reflects Fitch’s unchanged baseline scenario regarding the region’s strong budgetary performance, sound cash position and near-zero direct risk (direct debt plus other liabilities according to the Fitch’s classification). The Positive Outlook mirrors that on the sovereign ratings.
In 2017, the region’s tax revenue increased by 14% or RUB15 billion underpinned by rapid growth in corporate income tax (CIT), which is the largest tax in the region’s budget (69% of all tax proceeds).
Tyumen’s expenditure is less rigid than of most Russian regions. Additionally, high self-financing capacity, with the current balance and capital revenue comfortably covering most capital spending (2017: 96%), allows the region to maintain a low level of direct risk.
According to the experts, the region’s liquidity remains very strong. The region’s direct risk is negligible and limited to a budget loan of RUB321 million from the federal government. The region is net cash positive with cash reserves and deposits exceeding both direct risk and contingent liabilities since 2009.
Tyumen’s wealth indicators are strong: the GRP per capita is 1.9 times higher than the national median in 2016.
The regional administration consistently follows a prudent budgetary policy and conservative debt practices, which is reflected in a historically low debt and strong liquidity.
Tyumen Region’s ratings are constrained by the sovereign’s ones. Positive changes to the sovereign ratings would result in corresponding action on the region’s ratings provided the region’s credit metrics remain strong.Additional information is available at www.fitchratings.com.