Bad news pile up: S&P cuts rating outlook of Bucharest

“We revised downward the rating for Bucharest, as a result to country rating cut” said Jean-Louis Renard analyst at S&P agency.

The rating reflects the high debt burden of Romanian’s capital, the need to upgrade debts and liquidity management, low financial flexibility and drawbacks in implementing infrastructure projects.

The constraints are compensated by the strategic location of Bucharest as country capital, positive average operating balance, and high growth of revenues.

Outlook on Bucharest is negative because outlook on Romania is negative, analysts with the rating agency explained, adding that ratings’ evolution for Bucharest will follow the same path as Romania’s.

“Outlook on Romania is likely to be revised to ‘stable’, if outlook on Romania is revised to ‘stable’ or ‘positive’, in case the fundamental factors that we take into consideration are not deteriorating below our expectations” said Renaud, NewsIn informs.

Ratings will be cut anew, if the financial profile of the city worsens, the analyst stressed.

Standard & Poor’s cut on Monday ratings on Romania for credits in foreign currency from ‘BBB-/A-3’ to ‘BB+/B’, level which is outside “investment grade” category – citing soaring concerns on the country’s funding sources.