Bulgarian Credit Rating Revised To Stable From Negative; ‘BBB/A-3’ Sovereign Ratings Affirmed

On the 1 st December  2009,  Standard & Poor’s said:

– We are revising our outlook on the Republic of Bulgaria to stable from

negative, and affirming the ‘BBB/A-3’ sovereign credit ratings.

– The stable outlook reflects our view of the government’s commitment to

fiscal discipline, and our expectation that the government will implement

structural reforms in the social security system.

Standard&Poor's

LONDON (Standard & Poor’s) Dec. 1, 2009–Standard & Poor’s Ratings Services

today said it had revised its outlook on the Republic of Bulgaria to stable

from negative. The ‘BBB’ long-term and ‘A-3’ short-term sovereign credit

ratings were affirmed.

The ratings on Bulgaria reflect our view of the government’s strong track

record of prudent fiscal policy and low gross debt; solid growth prospects

over the medium term; and the country’s EU membership. Offsetting these

strengths somewhat are large external imbalances and the related risks as a

result of the adverse economic environment, which we expect to continue in

2010.

In our view, Bulgaria continues to face economic risks due to the

uncertain outlook for external demand and the sharp tightening of the external

commercial credit channel, which negatively affects domestic demand. As a

result, the current account deficit, which peaked in 2008 at 25.4% of GDP amid

an overheating economy, has contracted sharply and is expected at around 10%

in 2009 (we expect the deficit to be fully funded by foreign direct investment

flows). We expect GDP to contract by around 6% in 2009 and a further 2% in

2010, followed by a positive growth rate in 2011…

This material was taken from www.standardandpoors.com

Posted in News.

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