Fitch has simultaneously affirmed the city’s short-term foreign currency rating at ‘F3’, also with stable outlook.
“The ratings reflect the city’s ongoing positive economic development, political continuity at the local level, sound budgetary performance, and conservative regulatory framework,” the rating agency said in a statement.
“It also takes into account the relative low level of (financial) autonomy together with the volatile political situation in Romania which may impact on fiscal and economic policy in light of the next elections in autumn and the risks associated with its increasing debt level,” it added.
Fitch said an operating performance remaining well above 20% ensuring debt service coverage at current levels and reduced net new debt requirements to fund investments could trigger a positive rating action.
Conversely, a negative rating action could be triggered by an operating performance halving to 10% and resulting in a reduced coverage of capital expenditure and a concurrent deterioration of the debt and debt service ratios, it noted.