site.btaStandard&Poor's Lower Bulgaria's Credit Rating to "BB+/B"

Standard&Poor's 
Lower Bulgaria's 
Credit Rating to "BB+/B"


Sofia, December 12 (BTA) - The Standard&Poor's rating agency 
Friday lowered their long- and short-term foreign and local 
currency sovereign credit ratings on Bulgaria to "BB+/B" from 
"BBB-/A-3" with a stable outlook, the Finance Ministry said 
Friday.

The downgrade reflects the agency's view of a weakened domestic 
banking system, which has obligated Bulgaria to directly and 
indirectly support the third- and fourth-largest banks, the risk
that further state support to the domestic financial sector 
might be required, and a broader deterioration in general 
government finances - owing to weak growth and persistent 
deflation - which could require higher borrowing over 2014-2017.


The stable outlook balances the risks Standard&Poor's see from 
potential vulnerabilities building up in the financial sector 
against still-low levels of government 
indebtedness.

Standard&Poor's could upgrade Bulgaria's rating if governance 
issues are addressed effectively, Bulgaria's growth potential is
boosted, higher foreign investments are attracted into the 
tradables sector, or if the economy expands faster than the 
agency anticipates such that general government finances 
consolidate more rapidly.

The Finance Ministry quotes Minister Vladislav Goranov as saying
that Standard&Poor's factor in past events that have resulted 
from failures in the financial system of which the present 
government cannot be accused. The low economic growth and the 
risk of deflation are problems facing many EU countries, he 
noted. "The rating agency's document also has not factored in 
some positive results which are already a fact. These are the 
measures reflected in the mid-term budget forecast and the 
policies for lowering the budget deficit. Also, the guaranteed 
deposits in [the delicensed] Corporate Commercial Bank are being
paid as of December 4, and the payments under Operational 
Programme Environment have been restarted. We are familiar with 
the position of Standard&Poor's on how the country's rating can 
be upgraded, and we are convinced that very soon the agency will
have reasons to reconsider its opinion," Goranov said.

PK/DS


/ДЛ/