S&P cuts Varna

Standard & Poor's said it lowered its issuer credit rating on the Bulgarian City of Varna to BB from BB+.

The outlook is stable.

The downgrade reflects the deterioration in Varna's risk profile as a result of a notable increase in debt and a pronounced drop in liquidity, S&P said. This has occurred within a context of continuing high capital expenditures and lower revenue growth due to Bulgaria's continuing economic contraction, the agency said.

The rating is constrained by Varna's tight liquidity, rapid growth in debt and limited revenue predictability amidst an environment of high infrastructure investments and continuing economic contraction, S&P said.

These factors are mitigated by Varna's diversified and wealthy economy relative to the national average, the agency said, and improved operating performance thanks to strong expenditure control.

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