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Fitch Ratings affirms Romanian City of Brasov's IDRs at 'BBB-'.

Warsaw: Fitch Ratings, a nationally recognized statistical rating organization (NRSRO) designated by the U.S. Securities and Exchange Commission, affirmed the Romanian City of Brasov's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BBB-' and Short-Term Foreign-Currency IDR at 'F3'.

With Stable Outlooks, the affirmation reflects Fitch's unchanged baseline scenario regarding Brasov's sound operating performance, moderate level of debt and healthy debt ratios. Under Fitch's rating case scenario Brasov's operating balance will remain sound in 2017-2019, averaging 20% of operating revenue, which would be in line with the 2012-2016 historical average. This will be supported by the city authorities' continued cost-control measures and tax revenue growth, aided by the projected growth of the national economy. This should result in a nominal operating balance averaging RON130 million, which should be sufficient to fund the city's investment plan.

During 3Q17 the city collected 75% of revenue budgeted for a full year and incurred only 41% of a budgeted full-year expenditure, mainly due to slower capex launch, which resulted in a high interim budget surplus before debt variation of RON139 million (27.8% of total revenue). Fitch expects the city's expenditure to accelerate during 4Q17 due to seasonality of spending, although some capex may slip into 2018. Consequently, in 2017 Fitch expects Brasov to post a close to balanced budget, before turning into a deficit of up to 10% in 2018-2019 once investments co-financed from the 2014-2020 EU budget pick up pace.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Feb 23, 2018
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