Bulgaria’s credit rating up to investment grade
LONDON (Reuters) – Bulgaria had its foreign currency credit rating raised to investment grade yesterday by Standard & Poor’s, opening the door for more investors to buy the country’s bonds. «The upgrade reflects the country’s bright economic prospects and prudent fiscal policies,» said S&P, which is the first global ratings agency to give the EU candidate country an investment-grade foreign-currency rating. S&P lifted Bulgaria’s foreign currency sovereign credit to «BBB-» from «BB+,» and its local currency sovereign credit ratings to «BBB» from «BBB-.» The outlook is stable, it said in a statement. Investment-grade ratings allow a far wider group of investors to consider buying a country’s debt, and make it cheaper for the sovereign to raise funds due to the perceived lower risk of default. However, many fund managers require such a rating from two agencies before they can buy a country’s bonds. Moody’s Investors Service rates Bulgaria’s foreign debt two notches below investment grade, at «Ba2,» with a stable outlook. Fitch Ratings has the sovereign’s foreign-currency rating one notch below investment grade, at «BB+,» with a positive outlook. «Bulgaria’s improved creditworthiness is supported by its high growth potential, prudent fiscal policies, and European integration, which is likely to lead to EU membership in 2007,» S&P credit analyst Moritz Kraemer said in the statement. «The integration process will culminate in Bulgaria joining the European Monetary Union (EMU), most likely in 2010,» he added. The country’s bright growth prospects are supported by strong competitiveness and political commitment to prudent macroeconomic policies, the ratings agency said. S&P said Bulgaria was the 10th sovereign currently rated by it that had made the transition to investment from speculative grade. Bulgaria was one of four new entrants, along with the three Baltic countries – Estonia, Latvia and Lithuania – that avoided a European Commission warning over high deficits yesterday.
