Fitch Affirms Macedonia's Rating at BB+ with Stable Outlook

Fitch Ratings has affirmed Macedonia's Long-term  foreign and local currency Issuer Default Ratings (IDR) at 'BB+' with Stable Outlooks.

The issue ratings on senior unsecured foreign currency bonds have also been affirmed at 'BB+'. Fitch has also affirmed Macedonia's Short-term IDR at 'B' and Country Ceiling at 'BBB-'.

The global ratings agency said in a statement the affirmation reflects Macedonia's continued strong economic growth "supported by the government's fiscal stimulus".

"Large infrastructure projects will continue to support GDP growth, which is expected to average about 3.5% in 2014 and 3.7% in 2015," Fitch said.

Government debt was forecast to maintain its upward trend with debt dynamics expected to remain manageable, even though gross general government debt was projected  to continue rising to around 39% of GDP in 2014 as a result of the Eurobond issuance.

Macedonia successfully issued a seven-year EUR 500 M Eurobond in July to finance parts of the 2014 and 2015 budgets and to repay a EUR 150 M Eurobond due in 2015 as well as IMF loans of EUR 220 M.

The country's banking sector remains well capitalised, with a Tier 1 capital adequacy ratio of 14.3% at 1Q14, Fitch said.

The country's "strong macroeconomic policy framework, business environment and per-capita incomes are among its key strengths relative to 'BB' peers," the ratings agency highlighted, adding "the development of free financial zones may attract further foreign investment."

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