Fitch rates City of Tallinn stable outlook with 'A'

Tallinn Old Town (RIA Novosti/Scanpix)
11/24/2014 10:18 AM
Category: Economy

The Anglo-American rating agency Fitch Ratings has affirmed Estonia's City of Tallinn's long-term foreign and local currency ratings (IDRs) at 'A' with a stable outlook.

Credit ratings indicate the general creditworthiness and the likelihood that it will meet its financial obligations in a timely manner.

Fitch said that the ratings reflect Tallinn's solid operating performance, underpinned by robust financial and debt management practices. They also include a projected increase in direct debt over the medium term to finance investments and to refinance maturing debt. The ratings take into account the city's diversified local economy, with wealth indicators above the national median.

"However, given the country's small size relative to Europe and its reliance on European export markets, the city's economy is vulnerable to economic contraction in Europe," Fitch said.

"Tallinn, being the economic center of Estonia, contributes about 50 percent of the national GDP. Its service-oriented and diversified economy results in high tax revenue for the city. The city's management is actively expanding the local tax base, which together with prudent budgeting and a conservative loan policy, helps to underpin ratings,“ the rating agency said.


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