S&P Affirms Sofia City’s BBB Rating, Outlook Stable

S&P Affirms Sofia City’s BBB Rating, Outlook Stable

Standard & Poor's Ratings Services (S&P) affirmed its BBB long-term issuer credit ratings on the capital Sofia, with a stable outlook.
“The rating on Sofia reflects our view of the city's very positive liquidity  position and consistently strong operating budgetary performance,” the rating agency said in a statement. “We believe this is due to its strategic position as the administrative, financial, and economic center of the Republic of Bulgaria, which in our view has moderate economic wealth.”
Relatively good budgetary flexibility, due to its significant autonomy in managing local revenues and the availability of central government and EU funds for investments in infrastructure, also supports the rating, S&P added.
The rating is constrained by the consolidating but uneven institutional framework, which, combined with negative financial management, limits the predictability of the city's financial performance, according to the rating agency.
Further constraints to the rating include the city's large infrastructure needs. These widen its deficit after capital accounts and keep its debt burden relatively high with exposure to market risks, as well as the large contingent liabilities that relate to its exposures to municipal companies and a municipal bank, it said.
S&P estimates the city's GDP per capita to be about $15,500 in 2012, and to increase by about 1.5% on average in 2013-2015.
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