Astana gets Moody's Baa3 rating with stable outlook

Moody’s international rating agency assigned Astana a positive issuer rating of Baa3 with stable outlook, Tengrinews.kz reports citing International Media-Center Baiterek. “Moody's Investors Service has assigned first-time global-scale foreign and local-currency issuer ratings of Baa3 to the City of Astana, Kazakhstan Republic's capital. The rating outlook is stable,” the Media-Center writes. “The City of Astana's ratings are supported by its improving operating margins and consistently low financing deficits, which are based on the city's dynamic and diversified economy and the more benign fiscal framework. Its low debt burden is a further credit-positive factor for the city's rating,” a Moody's Senior Analyst and lead analyst for the City of Astana Aleksander Proklov said. The city’s budget performance values showed significant strengthening in 2011. Improvement of the economic situation and cancellation of the budget withdrawals have increased the budget’s operating margins to 21.7 percent in 2011 (vs 9.5 percent in 2010). Moody’s expects that the stable double-digit operating margins will remain in the medium-term perspective. Besides, the city shoes the close-to-balance financial results and limited needs in credits. Moody’s believes that such good economic perspectives of Astana and a favorable taxation and budget regulation provide a reliable functioning of the municipal finances. Besides, the agency states that Astana maintains a low level of the debt load at the cost of low values of the budget’s financial deficiency. Taking into consideration that the city is not planning to incur any market debt in the medium term, the debt will remain simple and at the modest level. “The central government's substantial investment in the city's infrastructure projects is credit positive for the city. About two thirds of the city's budget revenue represented capital transfers in 2009-2011, as the reconstruction of a large part of the city's infrastructure could not have been achieved solely with the city's own tax revenues. However, given that the city's own-source tax base will increase following the city's rapid economic development, we expect that the proportion of capital transfers will gradually decrease in the medium-to-long term", Proklov added. This rating is one step lower than the rating assigned to Kazakhstan (Baa2). This is explained by different budget level. By Maksim Popov