S&P Revises Plovdiv Outlook to Positive from Stable, Affirms 'BB+' Ratings

S&P Revises Plovdiv Outlook to Positive from Stable, Affirms 'BB+' Ratings

Rating agency Standard & Poor's said it revised the outlook on Bulgaria's second largest city of Plovdiv to positive from stable and affirmed the 'BB+' long-term issuer credit rating on the city.

"The positive outlook reflects our expectation that Plovdiv will be able to address its infrastructure needs with only a gradual debt accumulation and while maintaining its liquidity position," the agency said in a statement released on Friday.

Plovdiv's rating is constrained by the city's limited financial predictability, relatively low economic wealth, and the anticipated implementation of its investment programme, which could lead to a large and volatile budget deficit, it added. Nevertheless, Plovdiv benefits from a favorable debt profile, the increased responsibility of managing its own revenues, and a good liquidity position.

Uncertainty over future Bulgarian intergovernmental reforms, a broad revision of the city's long-term financial plans after a post-election reorganization of the city's administration, and significant infrastructure needs make the city's financial policy less predictable in the medium term, according to the agency.

"We consider that Plovdiv's modest economic recovery and low levels of wealth could constrain revenue growth. We estimate the city's GDP per capita at about a moderate $7,000 in 2011. In our base-case scenario, we expect the city'seconomy to recover slowly after stagnating in 2008-2010. We forecast Plovdiv's GDP to expand by 2.0% on average over 2012-2015, which is in line with our forecast for Bulgaria's economic growth," Standard and Poor's concluded.

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