The ratings incorporate the City’s strong budgetary performance, high liquidity position, solid self-financing capacity, very low, albeit rising, debt and strong debt ratios, Fitch explained.
They also reflect the robust growth of Katowice’s operating expenditure, due to growing rigid costs, as well as the projected high capital expenditure of about PLN 2,4 billion (USD 835,3m/EUR 604,4m) in 2010-2014 to be partly covered by debt, the agency added.
In the analysts’ opinion, the City is likely to have the capacity to pursue its prudent financial management and sustain the operating margin at not lower than 14% in the medium term.
However, the operating margin could be impeded if the City does not tighten the growth of operating costs, according to the rater.
The ratings could be positively impacted by an upward revision of Poland’s sovereign rating (“A-“/stable) – city can not be marked higher than the country – and sustained sound budgetary performance.
Alternatively, a possible weakening of operating performance much below Fitch’s expectations and a considerable increase in debt would be considered negative rating drivers, the analysts noted.
Fitch Ratings is a global rating agency committed to providing the world’s credit markets with independent and prospective credit opinions, research, and data. With 50 offices worldwide, Fitch Ratings’ global expertise, built on a foundation of local market experience, spans across capital markets in over 150 countries. Fitch Ratings is widely recognized by investors, issuers, and bankers for its credible, transparent, and timely coverage. Fitch Ratings is headquartered in New York and London and is part of the Fitch Group.