Rating - ocena wiarygodności kredytowej Miasta Szczecin
2003.04.04/2002.11.25 - International City Rating by Standard & Poor’s / Fitch Ratings Limited
Since 1998 Szczecin is rated by two independent rating agencies - Standard&Poor’s and Fitch Ratings Limited - which belong to the group of the best recognized and largest rating agencies in the world. So far, only a few Polish cities have been rated, including Szczecin.
The rating always reflects a strong budget standing of the City, limited indebtedness from the point of view of national and international standards, good liquidity, advanced and prudent financial management, including the development of a long-term investment plan.
Good notes also reflects a good transportation links and adequate infrastructure by Central and Eastern European standards and the city’s favorable location close to the German border and easy access from Scandinavia.
Current International Rating of the City:
1. Standard & Poor’S - Frankfurt - 04-Apr-03, 09:23:26 EST
City of Szczecin ’BBB’ Ratings Affirmed Based on Prudent Financial Management;
FRANKFURT (Standard & Poor’s) April 4, 2003 - Standard & Poor’s Ratings Services said today it affirmed its ’BBB’ long-term issuer credit and senior unsecured debt ratings on the City of Szczecin. The outlook is stable. Szczecin is located in Poland close to the German border.
The ratings on Szczecin reflect its economy and the city’s budgetary performance, which, although adversely affected by the Polish administrative reform and the economic slowdown in Poland, has been prevented from deteriorating significantly, owing to the city’s prudent budgetary management.
"Szczecin’s debt burden has been stabilizing and stood at a low 24% of operating revenues at year-end 2002," said Standard & Poor’s credit analyst Christian Esters. Debt servicing accounted for a low 4.4% of total revenues. The city posted a sound operating surplus in 2002, and owing to exceptional proceeds from asset sales, the total budget balance, including capital accounts, was a positive 3.5% of total revenues. The 2003 budget prudently provides for stagnating tax revenues, as opposed to the optimistic tax growth projections used in other Polish cities. Standard & Poor’s has assigned a negative outlook to three other Polish cities over the past few months.
"The sluggish growth of Polish national GDP and the crisis in the city’s maritime industry, however, have negatively affected Szczecin’s local economy," said Mr. Esters. "The bankruptcy of the shipyard Stocznia Szczecinska, the city’s largest employer and one of the largest shipyards worldwide, has worsened Szczecin’s unemployment rate over the past few months," added Mr. Esters.
Szczecin’s debt burden is expected to remain at a low level compared with other Polish cities rated by Standard & Poor’s. Nevertheless, it is crucial for Szczecin’s future financial profile that the city manages to implement its plans to increasingly finance investment expenditure through external funds.
The stable outlook reflects Standard & Poor’s expectation that Szczecin will continue its prudent financial management, which has allowed the city to stabilize its budgetary performance after the absorption of the negative effects from the Polish administrative reform. The city needs to decrease its structural budget deficits, however, which can currently still be covered by one-off proceeds from asset sales, to prevent a resumption in the growth of its debt burden.
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor’s Web-based credit analysis system, at www.ratingsdirect.com. Alternatively, call one of Standard & Poor’s Ratings Desks: London (44) 20-7847-7400; Paris (33) 1-4420-6705; Frankfurt (49) 69-33-999-223; or Stockholm (46) 8-440-5916. Members of the media may contact the Press Office Hotline on (44) 20-7826-3605 or via firstname.lastname@example.org.
2. Fitch Ratings Limited - London - 25 November 2002
Long - term (foreign currency): BBB
Long - term (local currency): BBB
Short - term (foreign currency): F 3
CITY OF SZCZECIN RATING AFFIRMED AT "BBB"
Fitch Ratings, the international rating agency, today has affirmed the Long-term foreign and local currency ratings of the City of Szczecin at ’BBB’. The Long-term Outlook is Stable.
The ratings reflect Szczecin’s moderate debt burden and the conservative budget policy of the city’s authorities during a slowdown in the local economy. It also takes into account Szczecin’s exposure to downturns in the maritime industry, recent changes in the political leadership of the city and low budget flexibility.
One of the main problems facing the new leadership, elected in October, is the increasing unemployment rate, which at 11% in 2001 was still lower than the national average. In 2002 the maritime industry was affected by the cessation of production at the Szczecin Shipyard, the city’s main employer. This resulted in a slight drop in tax revenue over the previous year. The damaging effect on the city’s finance, however, was limited, as Szczecin derives most of its revenue from the central government’s budget in the form of subsidies and grants. The portion of the latter in 2001 was 72% of current revenue. Moreover, the shipyard, which had reopened as a new state-owned company in July 2002, seems to have promising prospects for the 2003 year.
An adequate current budget balance, in spite of a drop in revenue, together with privatisation proceeds and cash reserves from the previous year will allow the city to avoid a rise in outstanding debt in 2002. In fact, some debt decrease planned by end-2002, will permit Szczecin to keep its debt burden unchanged. By end-2001 the total public debt (including guarantees) stood at a moderate 26.1% of current revenue. Revenue flexibility is constrained by the small portion of local taxes in current revenues (2001: 20%), and little room for manoeuvre available to the city in terms of the local tax rates. Furthermore, flexibility in current expenditure is limited by the high proportion of salaries and wages. Budget expenditure flexibility refers more to capital expenditure which is traditionally quite high.
The City of Szczecin enjoys city/county status (urban powiat) and is the capital of the region of West Pomerania. It has population of around 415,000.
Ilona Dmitrieva, Moscow Tel: +7 095 19 23 346
Elzbieta Kaminska, Warsaw +48 22 693 66 00