S&P affirms Sofia at BB+, outlook positive
In September Standard & Poor’s affirmed its long-term issuer credit rating on Bulgaria’s capital Sofia at BB+ with a positive outlook. The rating agency notes that the capital’s economy remains stronger than the national average.
In the rationale, the rating agency stated that Sofia enjoys high flexibility in adjusting its local revenues within certain brackets set by the central government. S&P expect the city’s liquidity coverage ratio to remain sound over the next 12 months. Adjusted for the expected deficit, free cash reserves and liquid assets will continue to cover the debt falling due over the next 12 months by almost 3x. A solid liquidity position and strong operating performance will help limit new debt, despite an ambitious capital program.
Economic activity is concentrated in the services sector (85% of Sofia’sGDP), and the city has a clear strategy based on promoting itself as an investment destination and a digital capital, S&P GlobalRatings said. The forecast is for continued solid operating results over 2017-2019, with surpluses now averaging 8.8% of operating revenues, backed by ongoing measures to improve collections, alongside better economic conditions and adequate control over expenses.
