S&P Affirms Sofia city at BBB, Outlook Negative

S&P Affirms Sofia city at BBB, Outlook Negative

Standard&Poor's Ratings Services (S&P) affirmed its 'BBB' long-term issuer credit ratings on the Bulgarian capital city of Sofia.

The outlook remains negative, reflecting that on Bulgaria, S&P said in a statement.

"The ratings on Sofia reflect our view of the city's very positive liquidity and good budgetary flexibility, which reflect its significant autonomy in managing local revenues as well as the availability of central government and EU funds for infrastructure investment," S&P said in the statement. "This flexibility is somewhat constrained, however, by the city government's reluctance to raise taxes and charges ahead of municipal elections in autumn 2015. Sofia's economic wealth is moderate compared with international peers and is neutral for its creditworthiness, in our view."

The ratings are constrained by Sofia's consolidating, but uneven institutional framework, according to the ratings agency. Combined with negative financial management, this limits the predictability of the city's financial performance, it added. "A large capital investment program will likely keep the city's budgetary performance at moderate, with widening deficits after capital accounts. It will also keep the city's debt burden relatively high, with exposure to market risks and large contingent liabilities relating to its exposures to municipal companies and a municipal bank," S&P said.

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