June 13 (Bloomberg) -- Bulgaria’s credit rating was cut by Standard & Poor’s, which said a “volatile” political backdrop is testing the country’s ability to overhaul its economy.
S&P lowered the long-term sovereign rating one level to BBB- from BBB, leaving the eastern European nation one step above junk and on par with Russia and South Africa. The ratings company assigned a stable outlook. Bulgaria’s debt is rated Baa2 by Moody’s Investors Service and BBB- by Fitch Ratings.
“Bulgaria’s political environment continues to pose a challenge for the implementation of reforms needed to tackle deep-rooted institutional and economic problems,” S&P analysts led by Aarti Sakhuja said in an e-mailed statement from London. “Absent meaningful reform progress, we expect growth to remain lackluster and unemployment high.”
The Socialist government of Prime Minister Plamen Oresharski came to power a year ago after anti-austerity protests forced out his predecessor, Boyko Borissov, triggering early elections. Oresharski’s minority cabinet is under pressure to resign after a poor showing at May 25 European Parliament elections. The premier survived a fifth no-confidence vote today.
Bulgaria’s economy expanded 1.2 percent from a year earlier in the first quarter, the same pace as the previous three months, according to the statistics office. The government plans to sell Eurobonds worth 1.5 billion euros ($2 billion) this year to repay $1.1 billion of international debt due Jan. 15 and maturing domestic debt.
Global bond yields showed investors ignored 56 percent of Moody’s and 50 percent of S&P’s rating and outlook changes in 2012, more often disagreeing when the companies said governments were becoming safer or more risky, data compiled by Bloomberg show.
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