OREANDA-NEWS. Fitch Ratings has revised the Outlook of Romanian City of Brasov's Long-Term Local Currency (LTLC) Issuer Default Rating (IDR) to Stable from Positive and affirmed the rating of 'BBB-'. A full list of ratings is at the end of this commentary.

Under EU credit rating agency (CRA) regulation, the publication of International Public Finance reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations. Fitch interprets this provision as allowing us to publish a rating review in situations where we believe makes it inappropriate for us to wait until the next scheduled review date to update the rating or Outlook/Watch status. In this case the deviation was caused by our downgrade of the sovereign's LTLC IDR on 22 July 2016.

The next scheduled review date for the City of Brasov is 9 December 2016.

The city's other ratings were last affirmed 10 June 2016 and are unaffected by the recent sovereign downgrade.

KEY RATING DRIVERS

The rating action reflects the following rating drivers and their relative weights:

HIGH

Following the downgrade of Romania's LTLC IDR on 22 July 2016 (See 'Fitch Applies Criteria Changes to Romania's IDR, at www. fitchratings. com), the LTLC IDR of the City of Brasov is now at the same level as that of the sovereign. Since local and regional governments usually cannot be rated above the sovereign, the Outlook has been revised to Stable from Positive, in line with the Outlook on the sovereign's LTLC IDR.

RATING SENSITIVITIES

An upgrade could be triggered by stabilisation of the city's operating performance with an operating margin above 20%, along with direct risk not exceeding 50% of current revenue. However, an upgrade of the IDR would additionally rely on the upgrade of the sovereign, as local and regional governments' ratings cannot be above the sovereign's.

A downgrade could result if the city's operating performance falls below 10%-12%, leading to sustained weaker debt payback and debt service above 50% of the operating balance or if there is a significant rise in Brasov's net indirect debt. Any negative action on Romania's ratings will be reflected in Brasov's ratings.

The current ratings are as follows:

-Long-Term Local Currency IDR: Outlook revised to Stable from Positive; affirmed at 'BBB-'

-Long-Term Foreign Currency IDR: 'BBB-'; Outlook Stable

-Short-Term Foreign Currency IDR: 'F3'