08.04.2020

High credit rating to help Tallinn take out a loan

Fitch Ratings has confirmed Tallinn’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'AA-' with Stable Outlook. The agency has also evaluated the outlook of the rating as stable also in the context of the expected recession due to the ongoing coronavirus crisis.

The affirmation reflects Fitch's expectations that the city's financial standing will remain robust and resilient to the economic downturn driven by the coronavirus pandemic. Fitch assumes that the city will keep comfortable liquidity during the economic downturn, which lessens the magnitude of the debt ratio worsening.

„With a high credit rating, Tallinn is able to take out a loan also in the current situation in order to make important investments to stimulate the economy,“ said the Mayor Mr Mihhail Kõlvart. „It has become especially obvious now how important and crucial it is to maintain a reasonable and responsible financial discipline. Thanks to the good state of Tallinn’s financial affairs, we have the ability to help our people and businesses during this difficult time. We will not remain a bystander, all sensible ways to alleviate the situation are being considered,“ added the Mayor.

As of of 2019, the city's net debt burden was 17% of operating income and the total debt burden was 216 million euros in absolute terms. Tallinn plans to borrow 76.8 million euros from the European Investment Bank in 2020.

Fitch notes that the financial situation of local governments around the world is affected by existing and probably regionally expanding measures to contain the coronavirus. According to the Agency, this possible perspective has been taken into account in the assessment, but the situation is constantly monitored and, if necessary, adjustments will be made in the assessments.

Estonia's long-term rating has just been confirmed at the same level as Tallinn, AA- as well. Fitch last updated the credit rating of the city of Tallinn in October, confirming the city's credit rating at the current level with an AA-, stable outlook.