The credit rating of Moscow (hereinafter, the City) is based on the City’s minimal debt load, high reserve of liquidity, and the highest possible budget and economic profile assessments.
The 2024 average population of Moscow amounted to 13.2 mln, or approximately 9% of the country. Moscow ranks first in Russia in terms of total gross regional product (GRP). Its high level of economic development is supported by its status as the political, financial, industrial, scientific, and cultural center of the country.
KEY ASSESSMENT FACTORS
The City has the highest possible economic profile assessment. The highest possible primary assessment of the City’s economic profile is based on two factors: the ratio of the City’s per capita GRP to the national average GRP and the ratio of average wage to subsistence minimum.
Unemployment in Moscow is consistently low. It was 1.0% in 2024 according to the ILO’s methodology, while the average for Russia was 2.5%. The unemployment rate averaged1 for 2021–2024 amounted to 1.6%. Diversification of tax revenues by industry is high, in 2024, the maximum share in the total volume of tax revenues received by the city budget came from financial and insurance activities (19.6%). A significant share of revenues also comes from trade (wholesale and retail and repair of vehicles, 18.3%).
Unemployment levels and tax base diversification justify the City’s maximum final economic profile score. The City is characterized by a high level of social and infrastructure development.
1 Hereinafter, averages are calculated according to the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation.
Minimal debt load. The City’s debt to current income ratio and debt to GRP ratio are consistently minimal. Borrowings planned for 2025 do not influence the debt load assessment.
As of January 1, 2025, the City’s debt included bonds (48%) maturing in 2025–2028 and infrastructure budget loans (52%) due in 2025–2039. According to the current version of the budget law, in 2025 the City plans to increase its debt by obtaining budget loans and placing bonds.
As of the start of the year, the City had to repay 3% of its public debt. This year, Moscow has already redeemed part of its bond debt, and as a result, debt had declined slightly as of April 1, 2025. The peak in repayments is scheduled for 2028 (when the City will have to repay 46% of its liabilities), but given the low debt load and significant size of balances in the budget’s accounts, this repayment will not create refinancing risks. Interest expenditures are insignificant.
The quality assessment of the debt load is determined by the Agency at the highest level due to the long weighted average debt repayment period (exceeding four years) and the City’s balanced debt policy, which is based on the use of long-term debt instruments diversified by type. The City’s credit history is positive, there were no accounts payable as of January 1, 2025, and the current account balance is positive on an annual basis.
High operational efficiency of the budget. The current account balance to current revenues ratio in 2021–2025 indicates that the City has enough internal revenues to completely finance its current expenditures. The size of the current account balance and accumulated liquidity will allow Moscow to finance the entire planned volume of capital expenditures. The budget’s need to use additional funds is offset by the City’s low debt load.
The share of tax and non-tax revenues in total revenues (excluding subventions) is close to 100% annually. Capital expenditures have exceeded 30% of total expenditures since 2021 (excluding subventions), and, according to the City’s projections, this indicator will remain at the same level this year. Capital expenditures are practically fully financed using internal revenues. Taking into account the parameters planned for the 2025 budget, the budget profile assessment will remain at the highest possible level.
The quality assessment of the budget profile is determined as the highest. There are no cases of violation of budget law, and the volume of lost tax revenues due to the use of tax incentives is insignificant for the budget. The City adheres to conservative planning of budget indicators, and the actual deficit is often somewhat lower than the target, which is frequently associated with the volatility of profit tax proceeds.
High reserve of budget liquidity. A significant amount of funds in the City’s budget accounts (including deposits) provides a substantial reserve of liquidity. As of January 1, 2025, the volume of funds in accounts, including funds placed in deposits, exceeded public debt as of the aforementioned date by several times. Income from placing temporarily free funds in bank deposits on an annual basis exceeds interest on debt servicing.
The quality assessment of budget liquidity corresponds to the highest level. Moscow has considerable experience in offering bonds in the debt market; account balances on average exceeded the budget’s average monthly expenditures by more than two times over the past 12 months. According to the City, overdue payables were absent as of January 1, 2025. The City does not use loans from the Federal Treasury Department to finance cash gaps and does not obtain credit lines to cover budget deficits, as this is unnecessary. There are no debt refinancing risks.
KEY ASSUMPTIONS
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Maintaining high budget liquidity;
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Maintaining the high operational efficiency of the budget.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A negative rating action may be prompted by:
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Significant decline in the operational balance and substantial increase in debt load;
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Substantial changes in inter-budget relations in Russia.
ISSUE RATINGS
Moscow Government Bond (ISIN RU000A106AV7), maturity date: May 27, 2025, issue volume: RUB 2 bln — AAA(RU).
Moscow Government Bond (ISIN RU000A1030T7), maturity date: April 21, 2026, issue volume: RUB 10.4 bln — AAA(RU).
Moscow Government Bond (ISIN RU000A1033Z8), maturity date: May 18, 2028, issue volume: RUB 70 bln — AAA(RU).
Rationale. In the Agency’s opinion, the bonds listed above are senior unsecured debt instruments, the credit ratings of which are equal to the credit rating of Moscow.
REGULATORY DISCLOSURE
The credit ratings have been assigned to Moscow and the bond issues (ISIN RU000A1033Z8, RU000A1030T7, RU000A106AV7) of Moscow under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Financial Instruments under the National Scale for the Russian Federation was also applied to assign the credit ratings to the above issues.
The credit rating of Moscow and the credit ratings of the bond issues (ISIN RU000A1033Z8, RU000A1030T7, RU000A106AV7) of Moscow were published by ACRA for the first time on August 30, 2017, May 21, 2021, June 7, 2021, and May 31, 2023, respectively.
The credit rating of Moscow and its outlook and the credit ratings of the bond issues (ISIN RU000A1033Z8, RU000A1030T7, RU000A106AV7) of Moscow are expected to be revised within 182 days following the publication date of this press release as per the Calendar of sovereign credit rating revisions and publications.
The credit ratings were assigned based on data provided by Moscow, information from publicly available sources (the Ministry of Finance, the Federal State Statistics Service, and the Federal Tax Service), and ACRA’s own databases. The credit ratings are solicited and the Government of Moscow participated in the rating process.
In assigning the credit ratings, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to the Government of Moscow. No conflicts of interest were discovered in the course of credit rating assignment.
