S&P Affms 'B+' Rtg on Nizhniy Novgorod; Otlk to Neg.LONDON--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/20/98 -- Standard & Poor's today affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its single-'B'-plus foreign currency issuer credit and senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. ratings on the Oblast oblast (ō`bläst, ŏ`–, Rus. ô`bləstyə) [Rus.,=region], administrative and territorial division in Russia, Ukraine, Belarus, and the former USSR. of Nizhniy Novgorod Nizh·niy Nov·go·rod or Nizh·ny Nov·go·rod A city of western Russia on the Volga River west of Kazan. Founded as a frontier post in 1221, it was formerly famous for its trade fairs. . The outlook is revised to negative from stable. The original rationale rationale (rash´  nal´),n the fundamental reasons used as the basis for a decision or action. for the Oblast's rating was recently detailed in CreditWeek (June 17, 1998), however, a number of developments have necessitated the change in outlook. Firstly, the Oblast has delayed its schedule of repayments of the US$19.7 million loan on-lent (to pay wage arrears A sum of money that has not been paid or has only been paid in part at the time it is due. A person who is "in arrears" is behind in payments due and thus has outstanding debts or liabilities. ) from the proceeds of the US$100 million Eurobond Eurobond A bond that is denominated in a different currency than the one of the country in which the bond is issued. Notes: A eurobond is usually categorized by the currency in which it is denominated, and is usually issued by an international syndicate. issued in 1997. These wage arrears loan repayments were due to commence in April 1998 (with a full repayment of the loan by November 1999) but have now been delayed until January 1999 (with full repayment by November 2000), although this is still dependent on the adoption of the repayment schedule into the 1999 Budget Law by the Legislative Assembly. Standard & Poor's views this delay to the schedule as presenting a number of operational concerns. The returned wages loan repayments were anticipated as being reinvested in local investment projects (the original intended use of the proceeds), which would generate sufficient profits to enable the Oblast to repay the Eurobond and its interest due. The delay means these projects will not receive their required capital investment in a timely manner and they will, consequently, have a shorter time period in which to make the required level of return. In any case, the present lack of economic growth within the Russian economy means that the achievement of these returns will present a significant challenge. Secondly, Standard & Poor's considers that the ongoing delay in the rerunning of the mayoral elections within the city of Nizhniy Novgorod (following the annulment annulment Legal invalidation of a marriage. It announces the invalidity of a marriage that was void from its inception. It is to be distinguished from dissolution or divorce. To justify annulment, the marriage contract must have a defect (e.g. of the original election) will increase the political uncertainty in the area. This uncertainty is likely to have a destabilizing effect on the prospects for economic and tax development within the city and Oblast. With the majority of Nizhniy Novgorod's revenues provided by activity within the city, it is vital that a stable political environment is created to provide the basis for the much needed economic growth in the region and to strengthen the finances of the Oblast, which are under significant pressure. Thirdly, Standard & Poor's will monitor the performance of the management of the Oblast following the recent appointment of a new director of finance. As this is the third change in this important position in the past six months there is an urgent need to establish and maintain clear financial leadership, improved transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. , and appropriate policies through a period of continuity of management. OUTLOOK: NEGATIVE Standard & Poor's will continue to monitor both the development of the political framework in the city and the revised repayment schedule for the on-lent funds. Until both of these issues are satisfactorily resolved it unlikely that the appropriate platform for the economic growth and, consequent con·se·quent adj. 1. a. Following as a natural effect, result, or conclusion: tried to prevent an oil spill and the consequent damage to wildlife. b. , financial stability within the Oblast will be created, which will facilitate the timely repayment of domestic and international debt, Standard & Poor's said. ---CreditWire
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