Fitch Frets Over BA City Issue

Fitch says it is closely monitoring the medium term credit impact of a sizable increase in the City of BA’s debt that will follow the anticipated issuance of ARP1.6bn in debt. “The city’s capacity to manage this increased indebtedness will likewise be tied to its tax revenue performance and to the related economy performance,” says the agency. It rates the city B (stable) but will look carefully at the debt ratios following issuance. Debt /revenues ratio has declined from 32.7% in 2005 to 19% as of September, says Fitch. “Considering the new issue, Fitch anticipates that this ratio could reach a level of 26% in December 2008, unless recent tax measures yield higher tax intake,” it adds. Firm details of the deal, including currency, maturity, and speed of debt issuance, remain to be set. A maturity of at least 7 years is expected.