July 2, 2014 / 4:22 PM / 3 years ago

S&P: Bulgaria bank turbulence will not change credit rating for now

SOFIA, July 2 (Reuters) - The turbulence in Bulgaria's banking system will not change Standard and Poor's sovereign credit rating on the country for now, the agency said on Wednesday.

It based its view on authorities' efforts to prevent the contagion from two bank runs in June from spreading.

The Bulgarian government has freed up 3.3 billion levs ($2.30 billion) as a precautionary credit line in state aid to banks, following runs on Corporate Commercial Bank (Corpbank) and First Investment Bank. The situation has since stabilised.

S&P had, before the runs started, downgraded Bulgaria's sovereign credit rating to one notch above junk, citing political turmoil in the Balkan state. The agency also said on Wednesday the runs partly reflected a view it took at the time of the downgrade that Bulgaria had "weak institutional effectiveness and poor governance." (Reporting by Matthias Williams; Editing by Janet Lawrence)

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