Fitch Affirms Bulgaria at BBB-, Outlook Stable
Monday, 13 January 2014
Fitch Ratings affirmed Bulgaria's long-term foreign currency issuer default rating (IDR) at BBB- and local currency IDR at BBB, the ratings agency said.
The outlooks on the ratings are stable, the agency said in a statement.
The issue ratings on Bulgaria's senior unsecured foreign and local currency bonds were also affirmed at 'BBB-' and 'BBB', respectively. Bulgaria’s country ceiling was affirmed at 'BBB+' and the Short-term foreign currency IDR at 'F3'.
“Strong public finances are the key factor underpinning for Bulgaria's investment-grade rating,” the ratings agency said. “Gross general government debt, at an estimated 18.5% of GDP in 2013, is the second lowest in the EU and less than half the 'BBB' median of 40.2%. Bulgaria is strongly committed to the currency board arrangement (CBA) that has been in place since 1997, which along with a set of fiscal rules limits the size of the general government deficit (GGD). A track record of fiscal prudence has afforded Bulgaria a measure of fiscal space. Fitch forecasts that the GGD (in ESA95 terms) will be little changed in 2014 from an estimated 1.8% of GDP in 2013, before falling slightly in 2015.”
Fitch said it assumes that Bulgaria will continue to pursue prudent fiscal and monetary policies consistent with the CBA, and that current political and social tensions will not escalate significantly. “Fitch assumes there will be progress in deepening fiscal and financial integration at the eurozone level in line with commitments by euro area policy makers. The agency further assumes that the risk of fragmentation of the eurozone remains low," it said.