Fitch confirms Romania’s rating: ‘BBB-‘, the outlooks are stable

The credit rating agency has affirmed Romania’s long-term IDR (Issuer Default Rating) at ‘BBB-‘ and local currency IDR at ‘BBB’, the outlooks being stable, a press release states. Similarly, the issue ratings on senior secured foreign and local currency bonds have been affirmed at ‘BBB-‘ and ‘BBB’, respectively.

The Country Ceiling has been maintained at ‘BBB+’, concurrently, the short-term foreign currency IDR being kept at the same ‘F3’ rating.

Affirming these ratings, as well as confirming the stable outlook reflect the positive evolution Romania has had in 2013 in terms of economic growth, the general government deficit which has been reduced over 2012 and also the progress made with the privatization of key state-owned enterprises (SOEs). Nevertheless, political struggles have an unfavorable impact on the country’s recent economic progress, Fitch seeing Romania’s trend growth as still weaker and more volatile than the ‘BBB’ median.

Although upside and downside risks to the rating are balanced, an improved rating could be supported provided there were visible a “stronger trend economic growth, as a result for instance of sustained structural reforms to SOEs, healthcare spending and the public administration, in turn leading to greater confidence that Romania is bridging income gaps relative to EU peers” and“a faster reduction in external debt ratios than Fitch currently expects”, the rating agency observes.

On the other hand, a major fiscal loosening jeopardizing the stability of public finances, failing to implement key structural reforms or external macroeconomic or geopolitical shocks deteriorating the fiscal and external buffers could trigger negative rating action, according to the said press release.