S&P lowers Bulgaria to BB+/B

Standard & Poor's said it lowered its long- and short-term foreign and local currency sovereign credit ratings on the Republic of Bulgaria to BB+/B from BBB-/A-3.

The outlook is stable.

S&P said the downgrade reflects its 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.

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