Fitch Affirms Bulgaria at 'BBB-', Outlook Stable

The outlook on both ratings is stable, the ratings agency said.Fitch also affirmed Bulgaria's Short-term rating at 'F3' and Country Ceiling at 'BBB+.

At 18.5% of GDP in 2012, Bulgaria's gross general government debt is the second-lowest in the EU, and well below the 'BBB' 10-year category median of 35.6%, Fitch noted, adding that it will remain below 20% in 2013-15.

Fitch forecast that real GDP will grow by 1% in 2013, followed by growth of 1.7% in 2014 and 2.3% in 2015. 

Non-performing loans, at 16.9% of the total portfolio in April 2013, are high, albeit adequately provisioned against, it added. Corporate sector indebtedness is higher than its rating peers, at 110% of GDP at end-2011 according to Eurostat. Intercompany debt was equivalent to 41% of GDP at end-2012 according to data from the IMF.

According to the ratings agency, Bulgaria will continue to pursue prudent fiscal and monetary policies, and the general government deficit will increase to 1.7% of GDP in 2013-14 from 0.8% in 2012.

Fitch projected that 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."