S&P rates Prague notes A+

Standard & Poor's said it affirmed the A+ and A-1 issuer credit ratings on the Czech city of Prague.

The outlook remains positive.

S&P also said it assigned an A+ rating to the proposed €200 million senior unsecured notes due 2023 to be issued by the city in June 2013.

The ratings reflect the city's strong economic fundamentals, solid budgetary performance resulting from a commitment to cost-containment measures and very positive liquidity position, S&P said.

The ratings are constrained by restricted financial flexibility, including the requirement to provide increasing financial support to the city's transport company, and limited budget predictability due to the city's emerging long-term financial plans and uncertain political leadership, the agency said.

Prague benefits from being an administrative and economic center in the Czech Republic, resulting in high wealth and good economic diversification, S&P said.

A well-diversified service sector dominates Prague's economy, employing about 80% of the city's labor force, the agency added.

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