(The following statement was released by the rating agency)

Dec 12 -

Overview

-- We are assigning our highest possible Russia national scale rating, 'ruAAA', to Moscow , Russia's economic, administrative, and financial center, which has a strong budgetary performance, very high liquidity, and low debt.

-- The 'BBB' long-term global scale rating and stable outlook on Moscow are unaffected by this action.

Rating Action

On Dec. 12, 2012, Standard & Poor's Ratings Services assigned its 'ruAAA' Russia national scale rating to Russia's capital city of Moscow. The 'BBB' long-term global scale rating and stable outlook on Moscow are unaffected by this action.

Rationale

The ratings on Moscow primarily reflect the 'BBB' foreign currency long-term rating on the Russian Federation (foreign currency BBB/Stable/A-2; local currency BBB+/Stable/A-2; Russia national scale 'ruAAA'). The global scale ratings on Moscow are now capped by the long-term foreign currency rating on the sovereign. Therefore we are assigning our highest possible national scale rating, 'ruAAA', to the city of Moscow.

The ratings reflect the city's position as Russia's economic, administrative, and financial center, as well as its diverse, service-based economy, with wealth levels well above the national average. They are supported by Moscow's very positive liquidity position and low debt.

Offsetting these positives is Russia's developing and unbalanced system of interbudgetary relations, in which flexibility is low, and distribution of revenues and expenditures largely depends on central-government decisions. Another constraint is Moscow's financial management, which Standard & Poor's views as negative in an international context. Long-term planning is still emerging and is hard to implement in Russia's system of interbudgetary relations. Budgetary policy enjoys only modest predictability: in spite of recent improvements the city implements capital projects with delays. Moreover, transparency is still modest, especially with regard to the city's government-related entities.

Related Criteria And Research

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

-- Methodology And Assumptions For Analyzing The Liquidity Of Non-U.S. Local And Regional Governments And Related Entities And For Rating Their Commercial Paper Programs, Oct. 15, 2009

-- Methodology: Rating A Regional Or Local Government Higher Than Its Sovereign, Sept. 9, 2009

Ratings List

New Rating

Moscow (City of)

Russia National Scale Rating ruAAA

(Bangalore Ratings Team, Hotline: +91 80 4135 5898 swati.ray@thomsonreuters.com,Group id:BangaloreRatings@thomsonreuters.com,Reuters Messaging: swati.ray.thomsonreuters.com@reuters.net)

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