Ostrava again achieves an improved rating

16/10 2019

International rating agency Moody's has increased the City of Ostrava's rating for the fourth year in a row. The City now has its higher ever rating: Aa3/stable. Again Ostrava has achieved the highest rating available to it, equal to the Czech Republic's rating.

Ostrava again achieves an improved rating

Photo: Ostrava City Authority Archive

No city can be awarded a higher score than the country in which it is situated. Moody's issued the latest rating following a detailed audit of Ostrava's financial management during the past year, the City's current financial situation, and the financial outlook (taking into account economic, political, demographic and other factors).

Mayor Tomáš Macura welcomed the new rating: "After increasing the Czech Republic's rating, Moody's has also raised Ostrava's rating from A1/positive to our best ever level – Aa3/stable. This reflects the stable environment as well as the City's responsible, prudent and forward-looking approach to its financial management."

Moody's carries out annual audits of the City's finances – including all 23 municipal districts and 40 companies and organizations constituted by the City.

The improvement of Ostrava's rating to Aa3/stable reflects the City's excellent operating results and low level of debt. The average gross operating surplus over the past five years is 22% of the City's operating income, and its debt makes up just 20% of operating income. The City's operating results have been boosted by a growth in tax revenues and strict control of expenditure, combined with a high level of cash reserves, low debt levels, prudent capital expenditure plans, and manageable mid-term debt service.

The outlook is stable, which reflects the stable rating awarded to the Czech Republic as a whole. The stable outlook also takes into account Moody's expectation that Ostrava's financial and debt indicators will remain at their current levels in the future – or may even improve, thanks to a sustainable increase in tax revenues and excellent cost control.

Ostrava has been rated by Moody's on an annual basis since 1998. The City's rating has improved gradually from the initial level of Baa1 to the current Aa3/stable.

Year Rating
1998 - 2002    Baa1
2003 - 2005    A3
2006 - 2015    A2/stable
2016  A2/positive
2017  A1/stable
2018  A1/positive
2019 Aa3/stable

The most recent improvement in Ostrava’s rating was made possible by the increase of the Czech Republic’s rating to Aa3.