(The following statement was released by the rating agency)
WARSAW/PARIS/LONDON, June 13 (Fitch) Fitch Ratings has affirmed
the Polish City
of Plock's foreign and local currency Issuer Default Ratings
(IDRs) at 'BBB' and
Long-term National rating at 'A+(pol)'. The Outlooks are Stable.
Fitch has also
affirmed Plock's PLN80m and PLN86.9m senior unsecured bonds'
currency rating at 'BBB' and their National Long-term rating at
KEY RATING DRIVERS
The ratings reflect Plock's wealthy tax base, high financial
moderate debt. The ratings also take into consideration the
operating performance in 2012-2013 and the growing debt of
although this is unlikely to put considerable pressure on the
Plock's stable and wealthy tax base supports high tax revenue.
companies with their large property estate provide high property
(25% of operating revenue), and high personal income taxes (PIT;
operating revenue) to the city's budget. They also support high
revenue (CIT) but expose the city's budget to the economic cycle
of the oil
industry, which can have a knock-on effect on CIT revenue, as in
Fitch expects Plock to post satisfactory operating performance
with an operating
margin of 8%-9% in 2014-2015. In 2013 Plock's operating balance
PLN43m, or 6.5% of operating revenue (2012: PLN85.6m or 12.2%)
as a result of
significantly lower revenue from CIT following the refund of
overpaid tax to one
of the largest taxpayers in the city.
Pressure on operating spending could continue in the medium
mitigated by the rationalisation measures already launched. For
expecting operating expenditure to grow 3% annually but below
revenue growth of 4%.
Fitch forecasts the city's debt will grow in 2014 to PLN440m
from PLN389m at
end-2013 but should remain moderate at about 60% of current
stabilising in 2015-2016. In December 2013, Plock issued bonds
PLN86.9m of its debt, taking advantage of favourable market
improving its debt maturity profile. Debt restructuring and the
operating performance, however, caused the debt payback ratio to
increase to 14
years in 2013, from five in 2012. Nevertheless, Fitch expects
this ratio to
improve to 10-11 years in 2014-2015.
Fitch expects the city's contingent liabilities to rise in the
medium term, to
about PLN160m in 2015 from PLN130m at end-2013, although they
should not put
heavy pressure on Plock's budget. The increase would be driven
by the rising
debt of municipal companies as they implement investments
co-financed by the EU.
The ratings could be downgraded if the city is unable to restore
performance on a sustainable basis with the operating balance
meet debt service obligations.
The ratings could be upgraded if the city improves its operating
margin to above
12% on a sustainable basis with the operating balance fully
covering annual debt
+48 22 338 62 85
Fitch Polska S.A.
16 Krolewska Street,
+48 22 338 62 96
+33 1 44 29 91 34
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530
email@example.com; 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:
International Local and Regional Governments Rating Criteria -
Tax-Supported Rating Criteria
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