S&P raises Stara Zagora to BB+

Standard & Poor's said it raised its long-term issuer credit rating on the Bulgarian City of Stara Zagora to BB+ from BB, owing to its robust revenue growth and good economic prospects.

The outlook is stable.

The rating is constrained by its weak operating performance, which will be aggravated by future operating expenditure pressures owing to a growing demand for public services, S&P said. Moreover, the city is planning an ambitious investment program, the agency said, which could result in moderate deficits after capital expenditure over the medium term. The rating also is constrained by Stara Zagora's limited financial flexibility within the centralized local government system.

The rating is supported by Stara Zagora's low debt level, which is not expected to increase significantly over the next few years, S&P said and the city's solid economic base with high economic growth and unemployment below the national average.

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