(The following statement was released by the rating agency)
LONDON/WARSAW/FRANKFURT, July 04 (Fitch) Fitch Ratings has
affirmed the Polish
City of Rybnik's National Long-term rating at 'A+(pol)'. The
Outlook is Stable.
KEY RATING DRIVERS
The City of Rybnik ratings reflects the city's sound operating
solid strategic and financial management which, together with
revenue and sound liquidity, support the city's strong
The rating also takes into account the city's low debt and
financing needs. These strengths are offset by persisting
pressure on opex from
a challenging legal framework and growing maintenance costs from
Rybnik's liquidity is much higher than in other Polish cities
rated by Fitch.
In 2013 the city's month-end cash balances more than three times
annual debt service. Its cash position at end-2013 was PLN96m,
limited by demand
on debt financing. Rybnik has also a liquidity credit line of
PLN10m, which has
been un-utilised over the last four years.
Fitch expects the city's direct debt to remain in line with
2013's levels or
even decline in 2014, given its high self-financing capacity.
Rybnik's direct debt in 2014-2016 to remain below 15% of current
13.5%). Debt coverage expected to remain at or below two years
over the medium
Rybnik has a track record of sound operating performance, which
Fitch expects to
continue in 2014-2016. The city should be able to keep its
operating margin at
11% over the medium term. Its operating balance, which averages
comfortably exceed debt service. In 2013, the operating balance
PLN69m, or 12.2% of operating revenue, covering debt service by
However, the small size of the city's budget leaves it
vulnerable to a weakening
of the domestic economy.
Prudent financial management is demonstrated in the city's
with actual results always stronger than budgeted, mainly due to
monitoring and rationalisation of the city's spending. This has
pressure on Rybnik to increase spending, especially in rigid
items such as
education and social care. Fitch expects the city to continue
its efficient opex
control and to prudently manage the budget over the medium term.
As with other Polish subnationals, Rybnik faces pressure to
increase opex. This
is driven mainly by underfunded responsibilities that were
transferred to local
governments by the state and the structural inflexibility of
expenditure in education and social care. Over the medium term
the city's budget
may also be affected by growing maintenance costs associated
with an expanding
The rating could be upgraded if the city strengthens its
on a sustained basis, with its operating margin above 14% and
direct risk at less than 20% of current revenue.
A downgrade could result from sustained deterioration of
far beyond Fitch's expectations or a significant rise in debt
resulting in weak
debt coverage of more than six years.
+48 22 330 62 85
Fitch Polska S.A.
16 Krolewska Street
+48 22 338 67 01
+49 69 7680 76 111
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530
firstname.lastname@example.org; Malgorzata Socharska,
Warsaw, Tel: +48 22
338 62 81, Email: Malgorzata.Socharska@Fitchratings.com.
Additional information is available on www.fitchratings.com.
Applicable criteria, 'Tax-Supported Rating Criteria', dated 14
August 2012, and
'International Local and Regional Governments Rating Criteria',
dated 23 April
2014, are available on www.fitchratings.com.
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
International Local and Regional Governments Rating Criteria -
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