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Fitch Affirms Bulgaria's Credit Rating at "BBB"
Fitch Ratings affirmed on Thursday its long-term foreign currency credit rating for Bulgaria at investment grade "BBB", with a stable outlook.
"Fitch remains concerned at the size of Bulgaria's current account deficit, although the predominant role of longer-term capital in financing it is reassuring," said analyst Andrew Colquhoun.
At the same time, the economic growth figures and strong public finances continue to support the rating, he added.
Booming imports drove the current account deficit to 16,2% in 2006, from 12,2% a year earlier, but investment growth, at 9% of gross domestic product (GDP), compensated for around 60% of the outflows.
Fitch said it shared the authorities' concern at the pace of credit growth, which rose by 49% in the corporate segment and 40% in the retail segment year-on-year at end-May, and is exacerbating macroeconomic imbalances and increasing exposures to potential shocks.
However, the fact that the banking system is almost 80% owned by foreign parents limits the risk the government would have to step in to provide support for the system in case of a crisis.
Strong economic growth, to the tune of 6,1% last year, further supported Bulgaria's credit rating, which measures the likelihood of the country failing to pay its debts. Bulgaria's "BBB" rating qualifies its debt instruments as a safe investment.
Novinite.com (26 July 2007)
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