OREANDA-NEWS. Fitch Ratings has revised the Outlook on the Polish City of Gdansk's Long-Term Local Currency (LTLC) Issuer Default Rating (IDR) to Stable from Positive and affirmed the rating at 'A-'. 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 Gdansk is 16 September 2016.

The city's other ratings were last affirmed on 18 March 2016 and are unaffected by the recent sovereign rating downgrade.

KEY RATING DRIVERS

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

HIGH

Following the downgrade of Poland's LTLC IDR on 22 July 2016 (See 'Fitch Applies Criteria Changes to Poland's Ratings at www. fitchratings. com), the LTLC IDR of the City of Gdansk is now equal with that of the sovereign. Under our criteria only in exceptional circumstances can a local or regional government be rated above the sovereign. Therefore the Outlook has been revised to Stable from Positive, in line with the Outlook on the sovereign's LTLC IDR.

The National Long-Term Rating could be subject to changes following potential recalibration of the National Rating scale.

RATING SENSITIVITIES

The ratings could be upgraded if the city sustainably maintains its operating margin around 15%, accompanied by direct risk being below 50% of current revenue. However, an upgrade of the IDRs would additionally rely on the upgrade of the sovereign, as local and regional governments cannot be rated above the sovereign.

Negative rating action could result from a sustained deterioration of the operating margin to below 10% or a significant rise in Gdansk's direct debt, leading to the city's debt payback ratio (debt/current balance) exceeding 10 years. Any negative action on Poland's ratings will be reflected on Gdansk's ratings.

The current ratings are as follows:

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

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

-National Long-Term Rating: 'AA(pol)'; Outlook Positive