The short-term ratings on both cities were affirmed at F3, the agency said.
Brasov’s ratings reflect the city’s “sound and improving budgetary performance with an expected operating margin for 2013 of about 20%, which is above the 13.7% reported in 2012,” Fitch said.
It said Brasov benefits from a supportive national policy framework ensuring sustainable transfers, which are linked to the economic development in Romania. The rating agency estimates Romania’s economic growth will accelerate to 2.6% in 2014 and to 3% in 2015, from 2% forecast this year.
The stable outlooks reflect Fitch’s projection that Brasov’s budgetary performance will further improve in 2014 following the progress it is likely to have made in the current year with a strengthening of debt coverage and debt servicing.
“Debt is likely to increase from 2014 but should, together with corresponding debt ratios, remain compatible with the ratings,” Fitch said.
The rating agency said Brasov did not incur any debt in 2012 and its financial planning does not include new borrowing in 2013.
However, Fitch expects the city to contract new debt in 2014 and 2015 to fund part of its investments.
Likewise, Oradea’s ratings reflect sound and stable budgetary performance, the city’s economic progress, a stable political environment as well as a supportive regulatory framework, the international agency said.
However, the ratings “also take into account the city’s limited budgetary flexibility and increasing direct debt,” Fitch noted.
The stable outlook reflects Fitch’s view that Oradea’s budgetary performance will gradually improve until 2016 and debt coverage and debt servicing ratios will remain sufficient for the current ratings.
“Given the infrastructural needs of a growing local economy, Fitch assumes debt will continue to rise but remain under the statutory debt-servicing limit until 2016,” Fitch said.