The credit rating of the Sverdlovsk Region (hereinafter, the Region) has been upgraded due to the Region’s low debt load (less than 30% of current revenues) coupled with it maintaining high budget liquidity and low refinancing risks amid a decline in the share of short-term debt as a result of restructuring part of the budget loans. ACRA also notes the balanced budget profile indicators and moderate socioeconomic development indicators that are partially dependent on the local metals industry.
The Sverdlovsk Region is part of the Ural Federal District and borders seven other regions of the Russian Federation. The Region’s population is about 4.22 mln (3% of Russia’s population). According to the Region’s estimates, its gross regional product (GRP) amounted to RUB 4.6 tln in 2024 (the Region’s GRP is consistently around 3% of the total GRP generated by Russia’s regions).
KEY ASSESSMENT FACTORS
High budget self-sufficiency and flexibility of budget expenditures. The Region’s ratio of tax and non-tax revenues (TNTR) to total revenues (excluding subventions) is high: its averaged1 value for 2022–2026 is projected to exceed 90%. The ratio of the current account to current revenues for the same period may amount to around 14%.
The averaged share of capital expenditures in the Region’s total expenditures for 2022–2026 is very high at about 20%. At the same time, the qualitative assessment of budget expenditure flexibility corresponds to the third category: capital expenditures are financed primarily from the regional budget, however, taking into account their dynamics in periods of low TNTR, the possibility of their significant reduction is not obvious. The need to increase the volume of capital expenditures corresponds to the capabilities of the regional budget. The current account balance after interest income and expenditures is regularly positive.
In the Agency’s opinion, the ratio of the modified budget deficit to current revenues averaged over the abovementioned period will be negative. The indicator has been adjusted by one notch due to the low debt load and presence of significant funds in budget accounts.
This year’s budget is expected to show a significant deficit, which will be financed mainly through the issuance of bonds and the utilization of available funds. As of October 1, 2025, the budget had been executed with a surplus, although it was much smaller than the one recorded last year.
The qualitative assessment of the Region’s budget profile is at the maximum level. There is no information about any breach of legislation that could affect the budget profile. The Region transfers extra tax revenues to the lower level; tax benefits cause no significant impact on the budget (6% and 7% of TNTR in 2023 and 2024, respectively). Budget planning is conservative and is hampered by partial dependence on the demand and prices for the main goods manufactured by regional enterprises.
1 Hereinafter, averages are calculated according to the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation.
Low debt load and insignificant debt refinancing risks. As of January 1, 2025, the Region’s debt load amounted to 21% of its current revenues and it is expected to grow to 26% by the end of this year. ACRA expects this indicator to grow to 26%, which continues to correspond to a low debt load.
At the beginning of the year, three quarters of the Region’s debt consisted of budget loans; the rest were bonds. The Region’s budget loan debt of RUB 48.9 bln is due to be repaid in 2025–2039 (repayment of two thirds of this debt has been postponed to the period from 2030 to 2039, in equal annual payments, with the possibility of waiver subject to certain conditions). Out of this amount, in 2025 the Region has already written off budget loan obligations to a total of RUB 2.6 bln. Consequently, as of October 1, 2025, the Region had to repay no more than 13% of its total debt annually.
Interest expenses are not burdensome for the Region since interest expenses averaged for 2022–2026 will amount to 1% of total budget expenditures (excluding subventions).
The ratio of debt to GRP annually does not exceed 4%, which corresponds to a low total debt load as per ACRA’s methodology.
The qualitative assessment of the debt profile corresponds to the maximum level. The weighted average debt maturity has grown considerably since it was restructured, the debt structure is diversified; there are no overdue accounts payable, and the current account balance is regularly substantially positive. The debt of public sector companies is not significant for the regional budget, and the need for their support cannot have a significant impact on it. Total expenses under commitments to public-private partnerships and concessions will not exceed RUB 2 bln annually in 2025 and 2026. The debt of the lower-level budgets is sustainably low. The Region’s debt policy is based on long-term borrowings.
High volume of available liquidity. The liquidity ratio amounted to 529% in 2024, and is expected to fall to 156% this year, which continues to correspond to the highest score. In 2024, the Region’s account balances on average exceeded monthly budget expenditures by two times. The Region deposits its accumulated liquidity with banks, which generates interest income.
The qualitative assessment of the liquidity profile is maximum. The Region is an active borrower in the debt market; there is no need to attract additional financing due to the presence of significant account balances. No tenders for credit lines have been held over the past 24 months, as they are unnecessary; no loan agreements were made with the Federal Treasury Department in 2024 and the past period of 2025. Refinancing risks are minimal, no significant increase in accounts payable of the regional budget is observed.
Diversified economy with moderate concentration on the metals industry. The Region’s GRP per capita averaged for 2020–2023 amounted to 89% of the national average. The ratio of wage to regional subsistence minimum averaged for 2021–2024 was 4.4. At the end of 2024, the unemployment rate averaged over the last four years calculated according to the ILO’s methodology amounted to 2.4%.
ACRA notes the moderate concentration of the economy on the metals industry which produces about a tenth of Russia’s steel and finished rolled products, up to a quarter of steel pipes, a fifth of iron ore, and a third of copper cathode. About a quarter of the world’s titanium is produced in the Region. According to ACRA’s estimates, the contribution of the metal production industry to the Region’s tax revenues averaged for 2021–2024 amounted to 17%. In 2024, six of the ten largest organizations in the Region (in terms of revenues) were related to the metals industry. Mechanical engineering and chemicals are also key sectors for the Region.
KEY ASSUMPTIONS
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Maintaining a high share of TNTR in the budget’s revenue structure;
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Execution of the budget with a deficit that does not exceed the target.
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 positive rating action may be prompted by:
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Accelerated growth of the Region’s economic development indicators, including a long period of GRP growth at rates above the Russian averages;
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Growth of internal budget revenues and lower need for additional financing.
A negative rating action may be prompted by:
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Economic development indicators lagging behand the national average trends;
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Averaged share of capital expenditures falling below 18% of expenditures;
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Averaged share of TNTR falling below 90% of revenues;
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The Region’s leverage growing amid a decline in budget liquidity and higher refinancing risks.
ISSUE RATINGS
Sverdlovsk Region, 35005 (ISIN RU000A0ZZQH9), maturity date: October 23, 2026, issue volume: RUB 5 bln — АA+(RU).
Sverdlovsk Region, 35006 (ISIN RU000A1016N9), maturity date: December 15, 2026, issue volume: RUB 5 bln — АA+(RU).
Sverdlovsk Region, 35008 (ISIN RU000A101Z17), maturity date: July 29, 2027, issue volume: RUB 12 bln — АA+(RU).
Sverdlovsk Region, 35009 (ISIN RU000A102CT6), maturity date: November 17, 2027, volume: RUB 8 bln — АA+(RU).
Rationale. In ACRA’s opinion, the bonds of the Sverdlovsk Region are senior unsecured debt instruments, the credit ratings of which correspond to the credit rating of the Sverdlovsk Region.
REGULATORY DISCLOSURE
The credit ratings have been assigned to the Sverdlovsk Region and the bond issues of the Sverdlovsk Region based on the following methodologies: the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation to calculate the SCA and determine the credit rating and the credit rating outlook of the Sverdlovsk Region under the national scale for the Russian Federation, the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities to ensure consistent and uniform application of ACRA’s methodologies, models, and key rating assumptions, and the Methodology for Assigning Credit Ratings to Financial Instruments under the National Scale for the Russian Federation to determine the credit rating of the bond issues under the national scale for the Russian Federation.
The credit rating of the Sverdlovsk Region assigned under the national scale for the Russian Federation was published by ACRA for the first time on September 9, 2017.
The credit ratings of the bond issues of the Sverdlovsk Region (ISIN RU000A0ZZQH9, RU000A1016N9, RU000A101Z17, RU000A102CT6) assigned under the national scale for the Russian Federation were published by ACRA for the first time on October 18, 2018, December 11, 2019, July 24, 2020, and November 18, 2020.
The credit rating of the Sverdlovsk Region and its outlook, as well as the credit ratings of the bond issues of the Sverdlovsk Region, are expected to be revised within 182 days as per the Calendar of sovereign credit rating revisions and publications.
The credit ratings were assigned based on data provided by the Sverdlovsk Region, 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 rating analysis was performed using the RAS accounting (financial) statements of the Sverdlovsk Region as of October 1, 2025.
The credit ratings are solicited and the Government of the Sverdlovsk Region participated in their assignment.
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 Sverdlovsk Region during the year preceding the rating action.
No conflicts of interest were discovered in the course of credit rating assignment.
Rating components: the standalone creditworthiness assessment is equal to the credit rating and corresponds to aa+.
