Fitch Ratings has downgraded the Romanian City of Bucharest’s Long-Term Local Currency (LTLC) Issuer Default Rating (IDR) to ‘BBB-‘ from ‘BBB’. The outlook is stable, an agency release informs.
“In this case the deviation was caused by the downgrade of the Sovereign’s Long-Term Local Currency IDR on 22 July 2016. The next scheduled review date for the City of Bucharest will be determined in December 2016 when Fitch will publish its sovereign and local and regional governments rating review calendars for 2017. (…) Following the downgrade of Romania’s LTLC IDR on 22 July 2016 due to our sovereign criteria change, we have taken a similar rating action on the city as local and regional governments usually cannot be rated higher than their sovereign. The City of Bucharest’s other ratings were last affirmed on 22 July 2016. The city’s Long- and Short-Term Foreign Currency IDRs were unaffected by the sovereign criteria change. Bucharest’s ratings are constrained by the sovereign’s ratings. In case of a sovereign upgrade the city could be upgraded if it maintains a strong operating performance and sound debt metrics that ensure investments are largely funded by internal resources. A significant increase in debt pressure due to deteriorating operating performance or recognition of contingent liabilities linked to the city’s public-sector entities as direct debt would trigger a downgrade,” the release reads.
Fitch Ratings has also revised the Outlook of Romanian City of Brasov’s Long-Term Local Currency (LTLC) Issuer Default Rating (IDR) to Stable from Positive and affirmed the rating of ‘BBB-‘.