Fitch ups Olsztyn outlook to positive

Fitch Ratings said it changed the Polish City of Olsztyn's outlook to positive from stable and affirmed the BBB(pol) long-term national rating.

The outlook revision reflects Olsztyn's improved financial position and Fitch's expectations that this policy will be continued. Thanks to increasing revenue and cost control measures, the city more than doubled its operating balance since 2004 and widened its 2005 operating margin to 10.5% from 5.8% in 2004. The 2005 operating balance comfortably covered debt servicing and Olsztyn reported surplus before debt variation of PLN 5.1 million in 2005.

Olsztyn's direct debt is expected to increase on the back of its substantial investment plans. According to the 2006 budget, the city's debt is projected to rise to PLN 166.5 million from PLN 108.5 million in 2005 on bond issuance and a new loan. The increase will raise the city's debt to operating revenue ratio to 37.6% from 25.4%, but Fitch predicted that debt will remain manageable.

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