Fitch IBCA Ratings - Press Releases - City of Szczecin, Poland, Rating Affirmed At 'BBB-'

City of Szczecin, Poland, Rating Affirmed At 'BBB-'

Fitch IBCA-London-7 December 1998: Fitch IBCA, the international rating agency, has affirmed the City of Szczecin's Long-term foreign currency rating of 'BBB-' and 'F3' for short-term issues. These ratings, which apply to senior unsecured debt issues, were originally announced in October as the first assigned to a Polish local government. The affirmation takes into account both Fitch IBCA's recent upgrade of the Polish sovereign rating and the current greater uncertainty about the direction of city policy, due to a change in the ruling coalition.

Following elections on 11 October 1998, the city council has elected Marian Jurczyk - one of the most important Solidarity leaders in 1980 and a former leader of the Szczecin shipyard workers - as mayor. The ruling coalition represented on the city's executive board comprises the SLD (which includes the successor party to the Communist party) and Jurczyk's Independent Social Movement. The former coalition partners, UW/AWS, are now in opposition. The AWS represention has been reduced following the defection of three of its members to the new ruling majority.

The ideological direction of the new administration is not self-evident. On the one hand there have been some worrying indications from the new mayor. He has spoken out against the city selling land to foreign buyers, and has opposed the planned Szczecin NATO local headquarters. On the other hand, most of the councillors in the new ruling coalition come from the SLD, which, despite its historical roots, in practice has tended to be reformist. Fitch IBCA believes it is important to assess the direction of the administration's policy in terms of what it is actually doing. Critically, the city's negotiations on bank loans are being continued by the new administration, there have been no changes to its medium term financial plan, and land sales to meet the 1998 budget are still expected to be approved.

Contact: Paul Fox; John Tichotsky; Przemek Hewelt, London Tel: +44 (0)171 417 4222

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