ECONOMY

Fitch ups Bulgaria’s currency rating on the back of sound policies

LONDON/SOFIA (Reuters) – Fitch Ratings yesterday raised Bulgaria’s long-term foreign currency rating to investment grade on the back of the country’s sound fiscal policy and key structural reforms. Bulgarian Finance Minister Milen Velchev welcomed the move, which follows a similar one by Standard & Poor’s in June, saying that the speedy improvement in the EU candidate’s ratings was unprecedented for an emerging economy. Fitch said it lifted Bulgaria’s foreign currency rating to BBB-minus from BB-plus and long-term local currency rating to BBB from BBB-minus. The outlooks on both ratings are stable. «The improvement in sovereign creditworthiness is underpinned by Bulgaria’s sound fiscal policy and advances in key structural reforms,» Fitch said in a statement. S&P on June 24 raised Bulgaria’s foreign currency rating to BBB-minus from BB-plus. Investment-grade ratings allow a far wider group of investors to consider buying a country’s debt and make it cheaper for the government to borrow due to the perceived lower risk of default. «It now will be interesting to see what Moody’s do. They are still two notches away,» said Timothy Ash, emerging Europe economist at Bear Stearns in London. «I think they (Moody’s) may do one notch now and may wait for the EU’s progress report in October,» Ash said. Moody’s Investors Service rate Bulgaria at Ba2. Velchev told reporters in Sofia that the Fitch upgrade was the 12th in three years for Bulgaria, which hopes to join the European Union in 2007. «This is something that has not been achieved by Russia, China nor Poland,» said Velchev, a former London city investment banker. «In a word Bulgaria, finds its place in the list on the desk of every prestigious investor.» He added that there was no need for Bulgaria to borrow from global markets. «We do not need to borrow from abroad to pay debt,» he said. Bear Stearns’ Ash said the ratings upgrade may not necessarily lead to increased inflow of foreign direct investment into Bulgaria. «The business environment is still difficult,» Ash said.