BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 10 – 17 JULY 2009 )
· The stock of international reserves declined by 1.7%
· Trade sales shed 15.2%
· Worst for Bulgarian economy is forthcoming
· Fitch: Bulgaria's economy to drop by 5.5%
· Bulgaria absorbs nearly EUR 585 M in Phare projects
· Targovishte, city with best conditions for business in Bulgaria
· Chinese embassy launches two exhibitions
· Holcim sees its aggregate extraction in Bulgaria falling 35-45% in 2009
· Bulgarian tailoring industry loses momentum
· K&K Electronics 2008 sales gain 13% Y/Y, net profit slips 28.8% Y/Y
· Washington Developments to invest in BG
· Carrefour will open a 6,900 sqm hypermarket in Dobrich City Centre
· Mr Bricolage intends to build three stores in the country in two years
· Britain's Melrose Resources invests in new Bulgarian oilfield
· Anheuser-Busch InBev's Bulgarian unit to invest €12.5 M in its brewery Astika
· Bulgaria foreign investments plummet by EUR 1,3 B
· 30 Firms interested in building tunnel under Bulgaria's Shipka pass
· The local Haos Invest to issue a license for electricity production from a wind-energy park
· Bulgaria's MonBat plans to set up recycling unit
· Balkanpharma sinks deeper in the mud in 2008
· Bulgaria competition watchdog fines car dealer BGN 240 000
· Deepening recession
The stock of international reserves declined by 1.7%
The stock of international reserves declined by 1.7% (EUR 197.5mn) last week to EUR 11.4bn as of July 3 after rising by 1% m/m in June, according to data of the central bank. The contraction was due to the government sector only, which reduced its deposit at the central bank by 5.1% during the period. The holdings of the commercial banks rose by 1.2% but were not able to compensate fully the government withdrawal. The reduction of the international reserves reached 10.3% since the beginning of the year steepening from 8.7% a week earlier. The ratio of foreign reserves to short-term debt deteriorated further to 89.4% as of end-April from 90.1% as of end-March, 95.7% as of end-2008, 126.3% at the end of 2007, and about 300% in 2002-2004.
Trade sales shed 15.2%
Trade sales in Bulgaria dropped by 15.2% in May from the same month of last year, according to the National Statistical Institute (NSI). Retail sales came in 10.4% lower, with only food, drinks and tobacco pulling off a 1.9% increase. Elsewhere, pharmaceutical and medical products trade dipped by 1.2% as computer hardware sales stumbled a formidable 17.4%. Wholesale trade declined by 13.3%, with non-food consumer items and food, drinks and tobacco goods, which together generate around 40% of the total revenue, posting small declines of 1.7% and 4.1%, respectively. Car and motorcycle sales plunged deeper by 39.3%.
Worst for Bulgarian economy is forthcoming
Economists of UniCredit Bulbank expect decline in gross domestic product (GDP) by 6 percent this year and by 3 percents in the next 2010, a message on the website of UniCredit Bulbank reads. According to experts’ estimates, presented today, the Bulgarian economy will go through a prolonged period of economic growth below the potential in comparison with other Central and Eastern European countries (CEE). "According to us the worst for the Bulgarian economy is forthcoming and the prospects for a recovery of the economy now seem vague and relatively remote in time. Of course, the positive side of all this is related to the rapid reduction of the current account deficit to levels that the market will be ready to tolerate in the period after the global financial crisis ", chief economist of UniCredit Bulbank Kristofor Pavlov explained. According to him the profit-making move in this situation is making a balanced pattern of growth of the Bulgarian economy in which contributions will have not only domestic demand, but also net exports. "This means changing the incentives in the economy so as to enable the transfer of resources from productive sectors oriented to domestic demand, which are characterized by a reduced potential for further growth to export-oriented industries. However to the production of medium-and high-tech products, characterized by medium-to high-value added and low labor-consuming and energy", Pavlov said.
Fitch: Bulgaria's economy to drop by 5.5%
Bulgaria's economy will contract by 5.5 percent this year and by 3.5 percent in 2010, Fitch Ratings released. This is the one in a row negative outlook on Bulgaria's economy after last week IMF forecast a seven-percent drop in the country's economy for 2009.
Bulgaria's long-term foreign currency rating is BBB- and Fitch currently has a negative outlook on it.The stable public finances influence positively the country's credit rating, Fitch Ratings informed. The budget still has a surplus of 600 million levs end-May, but it is nowhere near the record high surplus of 3.3 billion levs at the end of May last year.
The revenues to the budget for this year have fallen by 6%, whereas the expenditures have increased by 25%, Fitch reports.
Bulgaria absorbs nearly EUR 585 M in Phare projects
Nearly 585 million euro have been absorbed in Bulgaria so far for successful projects under the Phare Programme. The Phare Programme and the Transition Facility, with a combined budget of 200 million euro by May 31, 2009, continue to be implemented, the Ministry of Finace said Wednesday, citing a report on the implementation of the Programme and the Facility that National Aid Coordinator Lyubomir Datsov presented at a meeting of the Phare/Transition Facility Joint Monitoring Committee. The participants in the meeting discussed the results of the monitoring and evaluation of the programmes, the application of the procedures for registration, reporting and tracking of irregularities in the implementation of particular projecs. Representatives of the Bulgaria Unit in the European Commission Directorate General for Enlargement, who took part in the meeting, noted a positive development in the management and control of the implementation of Phare-financed projects.Opportunities to optimize the monitoring system and the control mechanisms with a view to completing the implementation of the Phare Programme for Bulgaria at the end of 2009 were discussed at the meeting.
Targovishte, city with best conditions for business in Bulgaria
Targovishte, in eastern Bulgaria, offers the best business conditions in the country, according to a poll by independent economic policy think-tank Institute for Market Economics (IME) released yesterday. The survey looks at administrative burden, local regulations, the quality of administrative services and corruption levels in the country’s 28 regions. The runner-up in the ranking was Vratsa, northwestern Bulgaria, followed by the central town of Gabrovo. Pleven, Smolyan and Stara Zagora trailed at the bottom. The report found that local governments do not have a clear idea of how they can improve the overall business environment in their territory. Instead they can make good progress in a certain area but only to fail in another. Corruption is more widespread in larger cities than in smaller cities, according to the survey. In smaller municipalities, however, it is replaced by personal relations. Local governments still cannot compete with each other in tax burden and one reason is that the state continues to cap taxes, which is a wrong practice, according to the analysts. They proposed that municipalities should receive a portion of the national taxes paid by its residents such as value-added tax and income tax. But finance ministry experts rejected the idea, saying it would plunge smaller municipalities into bankruptcy.
Chinese embassy launches two exhibitions
Days of the Chinese Culture will be held in the Danubian town of Rousse between July 15 and July 25, said organizers of the Rousse Municipality, the Kalagia Bulgaria-China Society for Friendship and the Municipal Youth Community Centre.The event is occasioned by the 60th anniversary of establishing of diplomatic relations between Bulgaria and China and is supported by the Chinese Embassy here and China's Ministry of Culture.The programme features an exhibition of Tibetan art, lectures by the Confucius Institute, a night show of martial and performing arts and a concert of the China Philharmonic Orchestra.Concurrently, the Chinese Embassy in Bulgaria will be launching an exhibition in Pleven, Northern Bulgaria,entitled "Elements of Modern Chinese Design". The exhibition will be on at the Iliya Beshkov Gallery from July 16 to August 30, curator Antonia Karaivanova told BTA.Exhibits include posters, logos, packaging, labels, book covers and designs of the 2008 Olympic Games in Beijing.The exhibition presents 73 works of Chinese designers of the last 20 years, which will be painted as scrolls in the traditional Chinese style guo hua. Karaivanova said that design in China has been growing in significance as part of the modernization of the country. Chinese designers build on age-old traditions and through skillfully applied wealth of colourful elements, embed modern and cosmopolitan features into millennia of history.
Holcim sees its aggregate extraction in Bulgaria falling 35-45% in 2009
Bulgarian-based aggregate maker Holcim Karierini Materiali, part of global cement maker Holcim, expects its aggregate extraction in the country to fall by 35-45% in 2009 hit by the economic downturn, a senior company official said on Wednesday. The global economic crisis which has severely hit the country's construction business will also force Holcim's Bulgarian unit to delay planned investments in concrete operations, the head of concrete, aggregate and ready mix concrete operations for Bulgaria, Thomas Guillot, told SeeNews in a recent interview. It is obviously a very severe downturn that we are facing," Guillot said. "We had four years of really impressive growth - not only at Holcim but also in the country. This year unfortunately the situation has reversed." By the end of the end we hope that we will limit the downsize to between 35% and 45%," Guillot said. Holcim Karierni Materiali had a 10-15% growth last year. Local industry officials have projected that aggregate extraction in the country is expected to shrink by 45-50% year-on-year in the first half of 2009. What we assume is that 2010 will be slightly similar to 2009, except that we hope that the bad months will be in the beginning and after that we will start to recover," Guillot said. Obviously we have reduced our expectations for development  we need to preserve the level of cash flow that we have and we have to recover the performance in the past before going to the next steps." Last year, Guillot said it planned investments worth approximately 10 million euro ($14.1 million) in concrete production within five years.The investments are not cancelled, they are rather delayed," Guillot said. The company will complete its 8-10 million euro refurbishment plan of its sand and gravel production in Chepinci, near the capital Sofia, but will not carry out other investment projects, at least as long the crisis is there" The annual capacity of the plant in Chepinci varies depending on the market in the range of 400,000 - 800,000 tonnes, Guillot said. The refurbishment started two years ago and is due to be wrapped up by the end of this year.In Bulgaria, Holcim also has two cement plants - in Pleven and in Beli Izvor, both in the north of the country. The company earlier this year halted clinker production at the two plants and laid off 90 people. It is not clear when clinker production will be resumed. Holcim (www.holcim.com), set up in 1912, runs production sites in over 70 countries worldwide and employs some 83,000 people. The group's core business includes the manufacturing and distribution of cement, aggregates, ready-mix concrete and asphalt. The group had net sales of 25.2 billion Swiss francs ($23.4 billion/16.6 billion euro) last year, compared to 27.1 billion francs in 2007.
Bulgarian tailoring industry loses momentum
Bulgaria's dressmaking sector suffered a 25% decline in orders for 2009/10 autumn/winter season, said Valeria Zhekova, who chairs the Bulgarian Association of Apparel and Textile Producers and Importers, as cited by news outfit Focus.The crisis pounded the sector first as cash-strapped consumers think clothes purchases over, she said. Consumption dwindled and traders found it hard to sell out stockpiles, which in turn plunged orders by 20%-25%, Zhekova explained. The industry lost around 20,000 jobs to 150,000 in 2008, under official statistics, from 170,000 in 2006-2007. Having peaked both in terms of sales volumes and value in 2007, the sector began losing momentum in 2008 as workers sought better paid seasonal jobs in Europe. Last autumn the country launched a procedure to hire Vietnamese workers to offset local staff outflow and keep its good market positions in Europe where 93% of Bulgarian garments are sold but the financial meltdown that snowballed into an economic crisis ended the effort, Zhekova said.
K&K Electronics 2008 sales gain 13% Y/Y, net profit slips 28.8% Y/Y
Bulgarian consumer electronics chain K&K Electronics booked a 13% year-on-year rise in 2008 consolidated sales to BGN 840.4 million (USD 604.8m/EUR 429.7m), showed company data. However, the consolidated profit shrank by 28.8% on the year to BGN 25.4 million. Non-consolidated sales and profit came in at BGN 829 million and BGN 26.4 million, respectively.The company operates a 76-strong Technomarket and Domo network and sells household appliances and consumer electronics under own brand Neo as well, covering the full range of white and brown goods. Administrative costs widened by 53% to BGN 71.5 million on a consolidated basis, while net financial expenses expanded by 31% to BGN 6 million. Own capital stood at BGN 89.5 million at the end of 2008. Long-term and short-term liabilities came in at BGN 36 million and BGN 211 million, respectively.
Washington Developments to invest in BG
Bulgaria is among our top destinations and we will invest some BGN 123 million in a joint multi-functional complex, Kevin Kerwin, director of Washington Developments for Bulgaria, said in a special interview for the Pari daily. Bulgaria is the most quickly developing country in the EU. The company has experience in high A-class buildings and operates in Ireland, Great Britain and Bulgaria.
Carrefour will open a 6,900 sqm hypermarket in Dobrich City Centre
Europe's largest retailer Carrefour will open a 6,900 sqm hypermarket in Dobrich City Centre in the northern part of the country. European Trade Center (ЕTC) plans to complete the construction works on Dobrich City Centre in 2011 and the facility will be launched officially in September the same year. In March, Carrefour opened its first unit in the southern Black Sea city of Burgas. It holds five more contracts for launching stores and plans to open hypermarkets in Sofia, Varna, Ruse, Stara Zagora, and Pleven as well. Carrefour is the world’s second largest retailer running more than 16,000 stores in 30 countries. The retailer opened 1,100 new stores last year and its sales reached EUR 97.6bn.
Mr Bricolage intends to build three stores in the country in two years
The local Doverie Brico, operating the chain of home improvement stores of France’s Mr Bricolage, intends to build three stores in the country in two years. Two units will be located in the capital city of Sofia and one in the country’s second largest city of Plovdiv. Afterwards, the retailer will consider expansion to smaller settlements with more than 50,000 citizens. A month ago, Doverie Brico unveiled plans to open five stores in Serbia and three in Albania by 2012. The chain will expand to Kosovo, Macedonia, and Montenegro at a later stage. Doverie Brico opened its first store in Bulgaria in 2000 and at present operates a chain of ten units: two in Sofia and one in each of the cities of Plovdiv, Varna, Burgas, Stara Zagora, Blagoevgrad, Dobrich, Pleven and Ruse. The chain owns total retail space in the country of 60,000 sqm. The retailer reports sales decrease in the country in the tune of 10% since the beginning of the year and projects the same reduction in the full-year readings as well. It has lowered the prices by 3% on average.
Britain's Melrose Resources invests in new Bulgarian oilfield
Scottish-based oil and gas company Melrose Resources PLC announced on July 14 that it contemplated to generate 11.2 million British pounds sterling, or 13.1 million euro, with which it will facilitate its exploration in Bulgaria.On July 14 the company sold 4.5 million shares, the proceeds of which will be allocated to the exploration of an offshore oil well, in the north-eastern seaside town of Kaliakra, business.scotsman,com has reported.This is the latest development in the company's operations in the country, following the announcement on December 6 2007 by the Bulgarian government that it had granted the UK company a three-year permit to conduct offshore surveys. With that, Melrose Resources PLC was effectively given the green light to explore the Black Sea coastline along the Bulgarian coast for oil and gas.Previously, a Melrose subsidiary ratified a 25-year concession arranged with Bulgaria to extract gas from a deposit in the Galata field, with estimated reserves of 1.44 billion cubic metres. The Galata deposit site was initially unearthed by Texaco Inc in 1993.In 2003/2004 Melrose developed and brought into production the Galata Gas Field, which at the time was Bulgaria's first offshore gas field. Melrose installed all the necessary infrastructure to extract and supply the Bulgarian domestic market with the energy source.According to miranda.hemscott.com, in early 2009, Melrose initiated a scheme which facilitated the conversion of the Galata field into a storage facility. Accordingly, the investment and modernisation has ensued that the facility will obtain a lifespan long exceeding the amount of gas which could be extracted from the ground. That way, even when supplies are depleted, the Galata gas storage facility will provide stable and secure supply for the Bulgarian gas market. The field was shut-in to enable this and is expected that first gas injection will take place in 2009.It has certainly transpired to come in handy now, as Melrose discovered further oil deposits in 2008 at Kaliakra and Kavarna, both of which happen to be near the Galata production platform. The success of those wells has opened up a number of further leads which Melrose is currently analysing.
Anheuser-Busch InBev's Bulgarian unit to invest €12.5 M in its brewery Astika
Kamenitza, the Bulgarian unit of the world's largest brewer Anheuser-Busch InBev, said on Wednesday it will invest some 24.5 million levs ($17.5 million/12.5 million euro) this year in its brewery Astika. A bottling line with a capacity of 50,000 bottles per hour will be opened in the Astika brewery this year, Astika manager Kalin Mihailov said in a statement. This will be the biggest such line in Bulgaria. Currently, the plant has an installed capacity to produce more than one million hectolitres of beer per year. Kamenitza has invested more that 27 million levs in Astika brewery since 1997.Kamenitza produces lager, dark and non-alcoholic beers under the namesake brand. Its product portfolio also includes Astika, Burgasko, Pleven, Slavena, Beck's, Staropramen and Stella Artois brands and imported Beck's Green Lemon, Belle Vue, Duvel, Hoegaarden and Leffe. It produced a total of 1.5 million hectolitres of beer last year. Kamenitza's main rivals on the Bulgarian market are Zagorka, part of Dutch brewing group Heineken, and Danish group Carlsberg. Total beer production in Bulgaria last year was 5.36 million hectolitres.
Bulgaria foreign investments plummet by EUR 1,3 B
The Bulgarian National Bank (BNB) has announced that foreign investments have dropped by EUR 1,3 B or 53,6% year on year for the first five months of 2009. The BNB figures for up until the end of May 2009 show that foreign investments totaled EUR 1,13 B. Real Estate investments were affected badly, the sector absorbed EUR 227,5 M from abroad, compared to EUR 577,9 M in the same period of 2008. By the end of May, Bulgaria's current account deficit reached EUR 1,971 B. This is down 44% year on year. The foreign trade gap in January-May 2009 was EUR 2 B against EUR 3,348 B in the same period of 2008.
30 Firms interested in building tunnel under Bulgaria's Shipka pass
Over 30 Bulgarian and foreign companies have expressed their interest in building a road tunnel under the Shipka Pass in Central Bulgaria.The news was announced by the National Agency "Road Infrastructure" which has received letters of interest by the potential investors, which were supposed to be submitted before the deadline on July 15.The letters of interest include general presentations of the companies and description of their experience and equipment. They are not binding in any way, and serve purely marketing research purposes.Based on the expressed interest, in September or October 2009, the road agency is going to hold an information meeting as a first step towards a public procurement tender for the construction of the Shipka Pass Tunnel.
The local Haos Invest to issue a license for electricity production from a wind-energy park
The local Haos Invest has asked the state energy commission to issue a 25-year license for electricity production from a wind-energy park, according to information posted on the website of the regulator. Haos Invest, fully controlled by Austria’s Aquavento Holding GmbH, is to install 8 wind-energy generators with total production capacity of 16 MW near Kavarna, on the northern Black Sea coast. The facility should be launched by end-October. The investment in the project has not been unveiled by now. Denmark’s Vestas will supply the V90 generators. Aquavento Holding GmbH is part of Anton Kittel Muehle Plaika GmbH, which runs 11 hydropower plants and 11 wind-power parks in Austria and maintains a small electricity distribution network with 250 end-users. Anton Kittel Muehle Plaika has been running renewable energy projects in Italy and Bosnia and Herzegovina in last five years.
Bulgaria's MonBat plans to set up recycling unit
Bulgarian blue-chip company car battery manufacturer MonBat said on Wednesday it plans to set up a unit to manage its recycling business.As MonBat has made considerable investments in the construction and modernisation of its recycling facilities, the company's management board found that this process should be managed by a wholly-owned subsidiary, MonBat said in a statement.The new unit, MonBat Recycling, will recycle car battery and lead scrap, lead alloys, polyethylene and polyprophylene, produce and trade in lead, lead alloys, polyethylene and polyprophylene materials. MonBat plans to list the new company on the Bulgarian stock exchange. Last month MonBat said it plans to set up a dealer in the UK. MonBat has subsidiaries in Serbia and Romania and the company's management board is yet to decide whether they would be acquired by the new company unit. MonBat had a pre-tax profit of 6.2 million levs ($4.5 million/3.17 million euro) for the first five months of 2009, down 54.88% from a year earlier. MonBat, a component of the Bulgarian bourse's blue-chip SOFIX index, fell 0.43% to 4.62 levs on Wednesday in a volume of 1,369 stocks. The statement was released after the end of the trading session.
Balkanpharma sinks deeper in the mud in 2008
The drug makers in the Balkanpharma group, owned by Iceland’s Actavis, have worsened their financial performance in 2008, showed the reports filed with the commercial registrar. Balkanpharma Troyan lowered its loss but sales slipped to BGN 28.75 million, the bulk of it generated by exports and only BGN 1.6 million from the domestic market. Balkanpharma Razgrad ended the year with a 28% drop in profit as revenue slid 24%. The lion’s share of almost 92% of the receipts came from ten major customers and 46% of the revenue came from exports.The group’s Dupnitsa unit saw its profit tumble to BGN 1.026 million from BGN 19.83 million in the previous year. Sales plunged by almost BGN 10 million, with exports fetching the bulk of the total. Last year the company finished the BGN 36.57 million revamp of its second tablet facility as part of a wide-ranging investment programme, which it claims have made it the largest solid pharmaceuticals producer in Southeastern Europe.
Bulgaria competition watchdog fines car dealer BGN 240 000
Bulgaria's Competition Protection Agency fined car dealer "Balkan Star Motors" Jsc with BGN 243 388 over a free gift offered by the company. Balkan Star Motors gave out a free Mutsubishi Colt car (which costs BGN 20 000 with the VAT) to anyone who bought a Mitsubish Pajero jeep (which costs BGN 77 000 with the VAT).According to the competition watchdog, Bulgarian competition protection law allowed only gifts that were promotional items of minor value, accessories, or other items to be resold in large quantities.The Commission has ruled that the promotion of the car deal was aimed at emphasizing the free second car that was provided to the end consumer as a way of gaining advantage over its competitors.
The economic downturn in Bulgaria will deepen in the second and third quarters of 2009, given the limited ability of local policy makers to loosen fiscal and monetary policy, keeping the overall gross domestic product (GDP) decline at six per cent in 2009. The downside pressure on growth in 2009 and 2010 will increase the risk of further rating downgrade in the coming months.However, the anticipated International Monetary Fund (IMF) package and the new government’s measures ought to provide support during the adjustment process.All indicators point to a deepening of the recession. Activity indicators in the export-oriented industries dropped off a cliff, with many companies implementing temporary shutdowns and shifting employees to a four-day working schedule to minimise layoffs. The collapse in external demand has been feeding through into other related sectors, such as business services and transportation, while sectors which benefited mostly from the previous investment boom have also experienced a sharp slowdown as private capital inflows dried up.Private consumption fundamentals have also worsened. If, on the one hand, consumers are feeling some relief in the decline of inflation, on the other hand the increase in debt servicing costs and abrupt turnaround in the labour market prevent any rise in consumption expenditures that may help mitigate the severity of the economic downturn.The most recent confidence surveys have failed to produce any indication that the economy has already reached a bottom and we expect the downturn to deepen in the second quarter and in the third quarter of 2009.Against this backdrop, we revised downward our year-on-year GDP growth forecast to a six per cent contraction in 2009 and a further three per cent decline in 2010. We expect the Bulgarian economy to experience below-potential growth for a longer period of time than most of the Central and Eastern Europe (CEE) economies, given heightened macroeconomic vulnerability readings and limited ability of local policy makers to loosen fiscal and monetary policy.After reporting month-on-month deflation for the last three months (adjusted for the impact of higher excise rates on cigarettes), we see the consumer price index receding by 2.5 per cent at the end of 2009. on the flipside, sharply lower investment spending and a contraction in private consumption this year will allow the current account deficit to narrow markedly to eight per cent of GDP, compared to 25.3 per cent in 2008.Government change Until recently, the very existence of the crisis was denied as, apparently, the outgoing Socialist-led government was afraid that its approval rating might suffer heavy losses just a couple of months ahead of general elections. The implication was that the stimulus packages implemented were not enough to offset the depth of the ongoing recession. only in early June did the government embark on more aggressive cost-cutting measures, as it became clear that major Budget rebalancing will be needed later this year to avoid a dangerous deficit widening. Parliament elections on July 5 in Bulgaria gave the centre-right opposition party GERB (Citizens for European Development of Bulgaria), founded by Sofia mayor Boiko Borissov, a 40 per cent share of the vote, helping beat the ruling Socialists, who gained 18 per cent.GERB is now expected to form a coalition government with the Blue Coalition – but still remain in control of the agenda. The key immediate consequence of the election ought to be the initiation of talks with the IMF for a support package, and the revision of the 2009 Budget.Help needed We believe that an external support package, if agreed upon, would be instrumental in smoothing out the hard landing and in minimizing job and economic growth losses that will necessarily arise. More importantly, external support will, as one local analyst put it, "buy some time" to allow crisis management measures undertaken by the next government to start taking effect. Similar to other CEE countries, the sovereign ratings of Bulgaria reached their peaks in the second half of 2007 and have seen downward dynamics ever since. At the moment, the outlook of the sovereign ratings assigned by two of the leading rating agencies is negative, while that of Moody’s remains stable. We think further rating downgrades should not be ruled out, given the scale of economic adjustment that is occurring.