(The following statement was released by the rating agency)
BARCELONA/PARIS/LONDON, June 13 (Fitch) Fitch Ratings has
affirmed the Spanish
Autonomous Community of La Rioja's Long-term foreign and local
Default Ratings (IDR) at 'BBB' with Stable Outlook. Fitch has
also affirmed the
Short-term foreign currency IDR at 'F2.' Its bond issues/senior
ratings have been also affirmed at 'BBB'.
KEY RATING DRIVERS
The affirmation reflects Fitch's expectations that operating
continue to improve over the medium term. The agency forecasts
margin will rise to 5%-7% in 2015 and 2016 from 1.94% in 2013 as
recover, while operating expenditure is expected to be volatile.
direct debt to increase until 2016 before stabilising.
Fitch expects the recovery in operating revenue in 2015 and 2016
to be driven by
likely growth of allocations from the central government and a
upturn, with forecasted growth of 1.2% in nominal GDP. However,
expenditure may increase slightly in the medium term, given
limited scope for
further austerity cuts.
La Rioja reported a smaller negative current balance of EUR13m
in 2013, or 1.37%
of current revenue, compared with a negative current balance of
2012, which reflected an exceptional EUR70m of invoices related
The regional government intends to comply with deficit targets,
by the 5% reduction in staff costs between 2011 and 2013 and in
transfers to La Rioja's public sector entities (PSEs).
Under Fitch's base case scenario, deficit is expected to narrow
and debt to
continue rising in the medium term but at a slower pace. Direct
forecasted to rise to EUR1.1bn-EUR1.2bn in 2014 and to
2015. The current balance should cover a small share of debt
9%-17%) in 2015 and 2016. In 2013, La Rioja extended its debt
calendar by restructuring a large amount of short-term debt into
Payables fell 41% from 2012 and Fitch expects a further
reduction of payables in
2014, under the new state law 9/2013.
The region has a strong manufacturing sector, which represents a
higher share of
regional nominal GDP in 2013 than the national average. La
rate in 4Q13 was 20.2%, lower than 25.7% nationally. In 2013,
GDP per capita in
La Rioja was 13.5% higher than Spain's.
The Outlook could be revised to Positive if the current balance
improves so that
it largely covers debt repayment, and if debt stabilises.
The ratings could be downgraded, if the Spanish sovereign
downgraded. The ratings could also be downgraded if La Rioja's
continues to report a material negative current balance in 2015
or if debt
increase exceeds expectations.
+34 93 323 8401
Fitch Ratings Espana, S.A.U.
Paseo de Gracia, 85,
+34 93 323 8410
+33 1 44 29 91 34
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530
Additional information is available on www.fitchratings.com
Applicable criteria, "Tax-Supported Rating Criteria", dated 14
"International Local and Regional Governments Rating Criteria
outside the United
States", dated 23 April 2014 are available at
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
International Local and Regional Governments Rating Criteria -
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