S&P ups outlook of four Bulgarian cities to positive

Standard & Poor's said it revised its outlook on Bulgarian cities Sofia, Vama, Plovdiv and Stara Zagora to positive from stable due to strong economic growth, improving performance and expected benefits from European Union accession in 2007. The cities' BB long-term issuer credit ratings were affirmed.

The ratings remain constrained by weak operating performance, low revenue flexibility and predictability and uncertainties related to ongoing intergovernmental reforms by the Republic of Bulgaria (foreign currency BBB/positive/A-3; local currency BBB+/stable/A-2).

In Sofia, these factors are partially mitigated by relatively high economic growth, a growing tax base, increased revenues, an improved political situation, better relations with the central government and a favorable debt profile, the agency said.

In Vama, these factors are mitigated by the city's diversified and growing economy, modest debt levels, improved liquidity and relatively sophisticated management.

Stara Zagora's ratings are supported by the city's solid economic base, which S&P said will benefit from the strengthening of the Bulgarian economy, and by the city's low debt levels.

In Plovdiv, the ratings are also constrained by contingent liabilities related to the city's loss-making municipal transport company. The ratings are supported, however, by the city's diversifying and growing economy and debt-free budget, the agency said.

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