Fitch has affirmed B- rating with stable outlook for the IDRs nominated in foreign and national currencies for the cities of Kyiv and Kharkiv. At this, the rating agency improved national long term rating of Kyiv from BBB(ukr) to A-(ukr). Kharkiv city got an approval for its long term AA-(ukr) rating with stable outlook too. The short term IDR in foreign currency got B- approval. The weak institutional environment continues to influence further improvement in ratings.
The rating of Kyiv reflects the consolidation measures in the city budget at the background of state budget run in profits. Kyiv city has provided guarantees for UAH 2bn financing of the projects in infrastructure, transportation and energy saving. The guarantees were issued in euros and terminate in 2018-2021. Fitch expects budget proceeds to stabilize in mid-term perspective.
The high risks for Kharkiv, in its turn, refer to unprofitable proceeds of municipal sector, as the city authorities continue to cover tariffs for housing and utilities sector.