S&P raises Romanian outlook to ‘positive’ on January EU entry

Ratings

Standard & Poor's raised its outlook on Romania's sovereign credit rating to „positive” from „stable” on prospects the Balkan country will join the European Union on Jan. 1. S&P, which a year ago raised Romania's foreign-debt ratings to BBB-, the lowest investment grade, said the country's debt burden in 2005 was still low at 20% of gross domestic product and it doesn't expect it to exceed 25% of GDP until the end of the decade. It didn't say when it next plans to again raise the country's ratings. „Under Romania's accession treaty, membership may be delayed to 2008 instead of 2007,” S&P said yesterday in a statement released in London. „A delay of one year is not expected, however, and in any case would not in itself affect the ratings or the outlook on the sovereign.” Romania, which counts on as much as € 30 billion ($38.4 billion) in financial assistance from the EU through 2013 to move closer to western European living standards, so far had its foreign debt raised to investment grade only by Fitch Ratings and S&P. Moody's Investors Service said on June 7 that it may raise Romania's credit rating to investment grade because of the country's low debt ahead of membership in the European Union. Moody's placed Romania's long-term Ba1 foreign and local currency ratings on review for a possible upgrade, citing „good progress in most relevant areas, reducing credit risks.” The European Commission, the EU's executive arm, will tell Romania and neighboring Bulgaria in two separate reports due Sept. 26 if they can join the trading bloc on Jan. 1 or face a one-year delay until 2008. (Bloomberg)

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