Fitch assigns Yerevan long-term 'B+' with Stable Outlook

YEREVAN, MARCH 5, ARMENPRESS. Fitch Ratings has assigned the Armenian City of Yerevan Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of 'B+' with Stable Outlook, ARMENPRESS was informed from the official website of FitchRatings.

The ratings reflect Yerevan's Standalone Credit Profile (SCP) of 'bb-', resulting from a combination of a 'Vulnerable' risk profile and a 'aaa' debt sustainability assessment. The IDRs are capped by the Armenian sovereign ratings of 'B+'/Stable.

Fitch assesses Yerevan's revenue robustness as 'Weaker' as most revenue comes from a 'B+' rated sovereign counterparty. Prospects for growth are limited by weak economic environment and disruptions caused by the coronavirus pandemic.

Yerevan has prudent control over expenditure, resulting in a track record of the expenditure dynamic closely correlated with revenue. The city's responsibilities remain relatively stable through the economic cycle. The largest spending item is education, which accounted for 42% of total spending in 2019. It was followed by the utility sector, which accounted for another 22% of expenditure. Most spending is financed through transfers from the central budget, which makes the city's budgetary policy dependent on the decisions of the central government.