S&P Lowers Rtgs On Oblast of Nizhniy Novgorod, Russia.

LONDON--(BUSINESS WIRE)--Standard & Poor's CreditWire 10/15/98--Standard & Poor's today lowered its long-term foreign currency issuer credit rating on the Oblast of Nizhniy Novgorod to Not Meaningful (N.M.) from triple-'C'-minus. At the same time, Standard & Poor's also lowered its long-term foreign currency rating on the Oblast's $100 million senior unsecured notes due 2002 to double-'C' from triple-'C'-minus.

The ratings reflect the Oblast's failure to pay in full and on time, or agree proposals for the full restructuring of, the first instalment payment of Russian rouble (Ru) 93.5 million ($7.2 million) due on October 15, for the Oblast's Ru217 million agricultural bond due October 2000. The double-'C' eurobond rating reflects increased concern over the Oblast's ability to meet future debt service payments on the eurobond.

Although the Oblast is currently up to date with its debt service payments on the eurobond (the most recent interest payment of $4.375 million was made on Oct. 3, 1998), the continuing deterioration in the financial position of the Oblast, and the resulting loss of liquidity, will further stress the Oblast's ability to make future payments. This position is exacerbated with the next eurobond payment ($4.375 million due April 3, 1999) being due at the end of the first quarter, when tax revenues are traditionally at their lowest.

The original intention was to repay the eurobond from returns on capital investment projects undertaken within Nizhniy Novogorod, which, given the current economic conditions prevalent in the Russian Federation (triple-'C'/Negative/'C'), also are unlikely to be achieved, Standard & Poor's said.--CreditWire