Fitch Ratings on Nov. 29, 2011, affirmed the Ukrainian region of Donetsk's long-term foreign and local currency ratings of 'B', short-term foreign currency rating of 'B' and national Long-term rating of 'AA(ukr)'.
As Fitch said in a statement, the outlooks for the long-term ratings are Stable.
According to Fitch, the ratings reflect Donetsk's strong economy, satisfactory budgetary performance and its risk free status. The ratings also factor in the regional budget's strong reliance on central government decisions and the overall evolving institutional environment in Ukraine.
Donetsk's ratings are constrained by Ukraine's sovereign ratings ('B'/Stable), reflecting the strong integration of the region's budget to the national budgetary system of the Ukraine.
Fitch notes that an upgrade of the sovereign ratings coupled with the maintenance of a satisfactory budgetary performance would be positive for the region's ratings.
Conversely downward rating pressure would arise if unfavorable changes in the institutional framework for Ukrainian subnationals negatively affected the region's budgetary performance and led to a significant deterioration of the region's debt position.
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