S&P: Varna on positive watch

Standard & Poor's said it placed its BB long-term issuer credit ratings on the Bulgarian City of Varna on CreditWatch with positive implications.

The CreditWatch placement follows nationwide economic growth in 2006, which should increase the property tax revenue and state transfers across all Bulgarian municipalities, S&P said.

Varna's revenue growth is expected to outpace expenditure growth, therefore leading to an improvement in budgetary performance. S&P noted Varna's ability to attract high levels of domestic and foreign direct investment, including in the real estate sector. The growth trend is expected to continue in 2007 owing to the positive economic environment, supported by the accession of the Republic of Bulgaria (BBB+/stable/A-2) to the European Union in January 2007. Recent legislative changes introduced by the national parliament also aim to enhance the financial autonomy of local governments and could have a positive effect on their creditworthiness, the agency said.

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