Two of the biggest credit rating agencies have recently raised their ratings for Bulgaria. Fitch revised its rating removing the minus from the BBB rating. Standard&Poor's have upgraded Bulgaria's long-term and short-term credit rating in foreign and local currencies to "BBB-/A-3". Moody's opinion is yet to be heard, but experts believe that this agency would also raise its assessment of Bulgaria and the Bulgarian economy.
What do these credit ratings really mean? Generally, they show the risk for investors who want to buy government bonds on international markets. The higher the rating of the agencies, the lower the risk for investors and the more acceptable the prices. It is believed that the highest rating is AAA. The United States and the most developed countries still have this rating, although there have been some hints that these excellent ratings may be revised downwards. That is how France lost one of its A's. Quite naturally, Bulgaria can not be compared to world economic leaders and their triple A ratings. The country ranks in the middle of the B-rated countries and even surpasses many other countries of its caliber and having similar economic potential. These B’s mean that investing in Bulgarian debt poses some risks and that the economy has imbalances and problems, combined with existing political and social instability. Overall, however, investment risks in this type of government bonds are acceptable and revenues are good. This is the point of view of buyers of sovereign Bulgarian bonds. From the point of view of the government that receives fresh money or pays old debts this way, good ratings of agencies mean that no huge interest will be paid on borrowed money and that it would be easier to find buyers.
The latest rise in Bulgaria's credit rating comes at a time when the economy is running at full speed, public finances are in good condition, the treasury is full, consumption and exports are rising… At this backdrop, Sofia announced that next year it would not need new debts. This, to some extent, makes the higher ratings of agencies meaningless after as new issues of government bonds would be offered in a limited amount only on the domestic market. But the very fact of improving assessments is something extremely positive and encouraging because it represents a kind of impartial assessment of the current situation and the perspectives for economic development of Bulgaria. It almost completely coincides with the forecasts of Bulgarian authorities, which expect economic growth of nearly 4% in 2017 and 2018.
Both rating experts and the government believe the outlook is stable and there are no real threats to the Bulgarian economy operating in full steam. In other words, Bulgaria will be able to repay previously borrowed money. Raising Bulgaria's credit rating is a kind of invitation to all those who have intentions for implementing projects, deals, or invest in this country. They show that Bulgaria is good for business; that the conditions are favorable and that their efforts are worthwhile. Bulgaria truly needs such messages as recently there has been a significant drop in foreign direct investments marked. Investments are needed to support growth in domestic consumption and employment with new projects and to ensure the stability of these positive developments. Investments are a guarantee for economic growth and social well-being. So, from this point of view, raising the country's credit rating by leading agencies is a positive sign that speaks of good prospects.
English: Alexander Markov
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