Fitch downgrades Wroclaw

Fitch Ratings said it downgraded the City of Wroclaw's long-term foreign- and local-currency ratings to BBB+ from A- and its national long-term rating to A+(pol) from AA-(pol).

The outlook is stable.

The agency said the downgrade reflects the deterioration in the city's operating performance and increasing direct debt, with the debt coverage unlikely to improve in 2010-2011. The ratings are constrained by high levels of debt, weak debt protection ratios and growing indirect risk.

The ratings are supported by the city's strong economy in the national context, flexibility in cutting its operating expenditure and significant European Union funding for infrastructure investments, Fitch said.

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