Wednesday, January 13, 2010

Romania’s Rating Outlook May Improve After Budget, S&P Says

By Adam Brown and Irina Savu

Jan. 13 (Bloomberg) -- Romania’s credit rating outlook may be raised as Parliament prepares to pass the 2010 budget this week in a move that would unfreeze a $30 billion bailout loan, Standard & Poor’s said.

“The ratings on Romania could indeed stabilize at the current level,” S&P credit analyst Marko Mrsnik said in a telephone interview today. The outlook will improve if “public finances are put on a consolidation path, and if the private sector’s access to external financing improves and pressures on the banking sector subside.”

Lawmakers are working toward a Jan. 15 deadline to approve the 2010 budget with a deficit no wider than 5.9 percent of gross domestic product, which was made a condition to unlock the International Monetary Fund-led loan. The rescue package was frozen after Romania’s government collapsed in October amid infighting, putting in question budget talks.

The European Union’s second-poorest member is rated BB+ at S&P, the highest junk grade, with a negative outlook. Moody’s Investors Service is the only agency that rates Romania investment grade, Baa3, while Fitch Ratings has a BB+, or junk, rating.

The Romanian leu rose to the strongest in eight months against the euro as Parliament debates the budget today, rising 0.4 percent to 4.1188 per euro as of 11:35 a.m. in Bucharest. It has gained as much as 3 percent this year while the Bucharest Stock Exchange’s main BET index gained as much as 9 percent to 5183.70, the highest level since September 2008.

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