S&P lifts Varna

Standard & Poor's said it raised its long-term issuer credit rating on the Bulgarian City of Varna to BB+ from BB, owing to its improved operating performance.

At the same time, the rating was removed from CreditWatch where it was placed with positive implications on Feb. 12, the agency said.

The outlook is stable.

The upgrade follows the significant improvement in Varna's operating performance in 2006, in line with other Bulgarian municipalities, the agency said.

The operating surplus reached a sound 8.2% of operating revenues, far exceeding the three-year average of 2.3%, S&P noted, adding that the rating on Varna, the third-largest city in Bulgaria, reflects its low financial flexibility and predictability, high infrastructure needs and expected gradual debt growth over the medium term.

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