OREANDA-NEWS. Fitch Ratings says in a presentation that its 2016 sector outlook for Russian utilities remains negative due to weak fundamentals and high regulatory risk.

We expect marginal demand growth in combination with overcapacity to continue putting pressure on power prices in 2016. Regulatory and political risks will probably persist against a background of sluggish growth.

The 2016 standalone rating outlook for Russian utilities is stable as we estimate the companies' credit metrics to have sufficient, albeit tighter headroom to absorb financial risk and to some extent regulatory risk. The ratings of half of the rated Russian utilities have Negative Outlooks but most of these are driven by the sovereign's Outlook.

In contrast to western European utilities, we see a convergence of business risk profile between Russian networks that are more exposed to challenging regulation and generators.