The Nizhny Novgorod region will borrow from commercial banks to pay off obligations

The Nizhny Novgorod region is going to take out a loan of 1 billion rubles. to cover the regional budget deficit and refinance the debt load. A credit institution for cooperation with the region will be selected through a competition in mid-June. Analysts note that the region simply intends to reduce the cost of servicing the public debt by paying off “expensive money with cheap money.”

The fact that the Nizhny Novgorod region intends to take out a loan of 1 billion rubles was stated in a statement from the regional government yesterday. The borrowed funds are planned to be used to cover the regional budget deficit and refinance government debt obligations. The regional Ministry of Finance intends to select a credit institution through a competition: an auction among banks for the right to provide funds to the Nizhny Novgorod region will be held on June 19, 2007. Two lots are up for auction: the right to provide a loan of 700 million rubles. and the right to provide a loan of 300 million rubles. The tranche term for the first loan is six months (9% per annum), for the second loan - three months (8% per annum). The minimum tranche amount is RUB 50 million.

Kommersant The revenues of the consolidated budget of the Nizhny Novgorod region for 2006 amounted to 59.242 billion rubles, expenses - 54.947 billion rubles, surplus - 4.295 billion rubles. The main sources of revenue for the consolidated budget were personal income tax, corporate income tax, property taxes, and taxes on total income. The 2007 regional budget revenues are set at 50 billion 640.426 million rubles, expenses - 55 billion 690.435 million rubles, deficit - 5 billion 50.009 million rubles. In August 2006, the international rating agency Fitch Ratings (FR) assigned the Nizhny Novgorod region long-term ratings in foreign and national currencies at the level of “B+”, a short-term rating of “B” and a long-term rating on the national scale of “A(rus)”. This is not the first time that the regional Ministry of Finance has attracted loans from commercial banks. Thus, in 2005 and 2006, credit resources were also used to pay off the budget deficit. The state debt burden of the Nizhny Novgorod region currently includes several bond issues: in April 2005, a loan of 2.5 billion rubles was placed. with a circulation period of three and a half years, in October 2006 the region issued securities worth 2 billion rubles. maturity of five years. The next, fourth, bond loan in the amount of 2.7 billion rubles. The regional government intends to deploy in October-November 2007. With the issue of the next bond issue, the share of securities in the structure of public debt will increase by 1.45 billion rubles.
Experts call it logical that the Nizhny Novgorod region is attracting funds to pay off government debt obligations: according to calculations by the Ministry of Finance of the Nizhny Novgorod Region, the total amount of the region's public debt during 2007 will increase by 34% - from 8.474 billion rubles. up to 11.384 billion rubles. The head of the operations department of the Nizhny Novgorod branch of the BrokerCreditService Investment Company, Mikhail Martynov, notes that the region simply intends to reduce the cost of servicing the public debt by paying off “expensive money with cheap money.” Alfa Bank debt markets analyst Ekaterina Leonova believes that, in general, the Nizhny Novgorod region attracted a loan of 1 billion rubles. will not come as a surprise to investors. “Such steps are usually provided for in the borrowing program, which is adopted along with the budget for the next year,” Ms. Leonova explained. According to her, with the loan, the debt burden of the Nizhny Novgorod region will not change, since the borrowed funds will be used to repay the remaining part of the second bond issue.
Maria Kuznetsova

Kommersant (Nizhny Novgorod) No. 92 from 05/30/2007

Public debt will be serviced with a loan