Austrian State of Styria 'AA+/A-1+' Ratings Affirmed; Outlook Stable
FRANKFURT (Standard & Poor's) Jan. 29, 2009--Standard & Poor's Ratings
Services said today it affirmed its 'AA+' long-term and 'A-1+' short-term
issuer credit ratings on the Austrian State of Styria. The outlook is stable.
"The ratings are based on the strong system support in Austria and the
state's relatively low tax-supported debt burden at 32.3% of adjusted
operating revenues expected for 2008, which is low in an international
comparison but on a rapidly rising trend," said Standard & Poor's credit
analyst Thomas Fischinger. We include in tax-supported debt the debt of
outsourced entities, which is rapidly increasing. The ratings are further
supported by its excellent access to liquidity because all Austrian states are
entitled to direct access to the federal treasury agency. The prosperous and
diversified regional economy with accompanying low unemployment rates is a
further supporting factor.
The ratings are constrained by the deficits after adjusted capital
expenditures over the past three years. We expect a deficit for 2008 of 4.7%
of total revenues. This is leading to a continuously rising debt burden, which
the rating currently can sustain.
"The stable outlook is based on our expectation that Styria will have
continuous access to liquidity, and that the political system in Austria will
remain very stable and predictable," said Mr. Fischinger. "This mitigates
other weakening elements, such as deteriorating and growing fiscal imbalances,
the state's rising debt burden, and the clouding economic prospects in
Austria."
We could lower the rating if the government does not agree on a
consistent plan to close the structural deficits in its budgetary performance
or demonstrate a will to implement corresponding measures in the medium term.
By contrast, the outlook could be revised to positive if Styria manages to
close its structural financial imbalances and reduce its relatively high
unfunded pension obligations. In addition, a rolling financial planning, which
meets international standards, would increase the predictability of financial
trends and would benefit the rating.
Ratings information is available to RatingsDirect subscribers at
www.ratingsdirect.com. It can also be found on Standard & Poor's public Web
site at www.standardandpoors.com; select your preferred country or region,
then Ratings in the left navigation bar, followed by Find a Rating.
Alternatively, call one of the following Standard & Poor's numbers: Client
Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris
(33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or
Moscow (7) 495-783-4017.
| Primary Credit Analyst: | Thomas Fischinger, Frankfurt (49) 69-33-999-243; thomas_fischinger@standardandpoors.com |
| Secondary Credit Analyst: | Alois Strasser, Frankfurt (49) 69-33-999-240; alois_strasser@standardandpoors.com |
| Additional Contact: | International Public Finance Ratings Europe; PublicFinanceEurope@standardandpoors.com |
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