The agency also upgraded their short-term foreign currency ratings to ‘F3’ from ‘B’, while simultaneously affirming the long-term local currency ratings at ‘BBB-,’ with stable outlooks.
At the same time, Fitch has placed Bucharest’s long-term foreign currency rating of ‘BB+’ and long-term local currency rating of ‘BBB-‘ and short-term foreign currency rating of ‘B’ on Rating Watch Positive (RWP).
The rating actions follow the upgrade of Romania’s ratings to ‘BBB’ from ‘BBB-‘ on Monday, the statement noted.
“The RWP on Bucharest’s ratings reflects Fitch’s view that as the capital city, it should have improved in terms of economy and budgetary performance in line with the sovereign,” Fitch said.
Bucharest, Brasov and Oradea’s ratings reflect the tight financial and governance relationships between the Romanian cities’ local governments and the sovereign, ensuring a strong credit linkage, it added.
“The highly centralized budgetary system for Romanian local governments ensures state support and control of the cities’ financial position, including debt approval, but it also acts as a constraint on the cities’ budgetary flexibility,” Fitch said.