S&P affirms Zagreb

Standard & Poor's said it affirmed its BBB long-term issuer credit rating on the City of Zagreb, the capital of the Republic of Croatia (foreign currency BBB/stable/A-3, local currency BBB+/stable/A-2).

The outlook is stable.

The agency said that the rating reflects the city's consistently robust budgetary performance and its relatively strong economic position as Croatia's economic, financial, and administrative center.

The rating also reflects Zagreb's moderate debt burden, despite the likely increase in the liabilities of Zagrebacki holding d.o.o. (BBB/stable), which S&P said it consolidates into the city's tax-supported debt.

Constraining factors include the city's low financial flexibility and its limited borrowing capacity, both resulting from the current institutional framework, which weighs on the city's liquidity and debt management, the agency noted.

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