19.06.2015

Fitch Ratings has affirmed Bulgaria's Long-term foreign and local currency Issuer Default Ratings (IDR) at 'BBB-' and 'BBB', respectively. The Outlooks are Stable. The Country Ceiling has been affirmed at 'BBB+' and the Short-term foreign currency IDR at 'F3'.

The analysis of the Rating Agency shows that Bulgaria's ratings are currently supported by the sovereign's lower level of domestic and external indebtedness relative to its 'BBB' range peers, as well as a sufficient level of foreign reserves, which provide stability to its existing currency board regime. These factors offset structural weaknesses in the economy, which constrain higher trend growth and limit Bulgaria's convergence progress with western European standards of living.

The Stable Outlook reflects Fitch's assessment that upside and downside risks to the rating are currently balanced. According to the Agency the main risk factors that, individually or collectively, could trigger negative rating action are re-emergence of instability in the banking sector, which may increase pressure on government fiscal finances and economic growth, further fiscal slippage that threatens the long-term sustainability of public finances and a negative economic shock that causes a downward revision in medium-term GDP.

Fitch points out that the main factors that, individually or collectively, could trigger positive rating action include credible fiscal consolidation that supports the long-term sustainability of public debt dynamics, stronger trend GDP growth and progressive convergence towards average EU income levels and sustained improvement in institutional governance.

You can find the full text of the Agency's press release HERE.