Global Ratings (GR) agency awarded the very high AA- (stable outlook) long-term credit rating to Shoumen municipality during a special news conference held in Sofia October 10.
The municipality’s stable financial status merited the high credit rating, said Christine Gantcheva, chairperson of the Global Ratings rating committee.
Several steps undertaken by the municipality last year were presented as evidence for Gantcheva’s conclusions.
In 2005 the municipality issued bonds with a nominal value of 1000 leva each and an interest rate of 8.7 per cent, paid semi-annually. The bonds should be fully repaid by 2010. GR awarded A (stable outlook) long-term credit rating to Shoumen’s bond issue. The assigned short-term credit rating is a-1.
Also, in 2003 the Municipal Bank granted Shoumen an investment loan of 1.5 million leva. The proceeds of the loan were used for the reconstruction of the city's oncology dispensary. The redemption of the loan started in January 2004 and, as of July 2006, the rest of the amount due is 604 880 leva. According to Global Ratings, the repayment of this loan would not have a negative impact on the municipality’s financial performance.
Shoumen’s 2006 budget plan showed revenues increasing by 148 per cent compared to 2003. For the defined period the municipality has reported a positive total balance, varying from 0.3 per cent to 3.5 per cent from total budget revenues. It is expected that in 2006 the total balance would be 0.3 per cent.
Another positive factor, according to GR, is that measured with the indicator revenues from sales per person, the Shoumen municipality's level are highly under the average for the country, with 50 per cent.
The municipality's economic indicators - GDP and Bulgarian National Standard - show that it is on the third place in the north-eastern region, according to the ratings agency.
Shoumen municipality is situated in the central part of north-eastern Bulgaria. It consists of the city of Shoumen as well as 26 smaller villages with a total of 87 200 people.
Deputy mayor Marin Kounev said the rating would help Shoumen attract investors. At present there is a 45 million euro investment in Shoumen, Kounev said. The investment is for the construction of a biodiesel factory.
One of the reasons Shoumen enjoyed an improving financial status, Kounev noted, was that last year the local administration was given the opportunity to collect its own taxes.
“It turned out that we do this better than the state,” Kounev said. “However it is not all about how much you collect but how you spend it as well”. The municipality would use the ratings to apply for credits before banks, Kounev said. The money from these credits would be used for road, hospital and sewerage repairs.
Two private companies received credit ratings from GR as well.
Bulmedia, an outdoor advertising company, received BBB- (positive outlook) long-term credit rating. The assigned short-term credit rating is a-1. Gantcheva explained GR's decision by saying Bulmedia enjoyed “excellent market position, free debt position, stable sales volumes, reputable customers and qualified personnel”.
The other company awarded by GR was Herti Ltd., which received the A+ (positive outlook) long-term credit rating. Heri, based in Shoumen, is the leading Bulgarian producer of aluminium closures for alcohol drinks as well as plastic closures for mineral water bottles.
“Most of our production is for markets abroad and this rating would help us expand even further,” said Heri’s manager, Zahari Zahariev.
