Standard & Poor's ratings agency raised its short-term foreign and local currency sovereign credit ratings on Bulgaria to 'A-2' from 'A-3' based on its recently adopted methodology.

The agency also affirmed our 'BBB' long-term foreign and local currency sovereign credit ratings.

The outlook is stable.

The transfer and convertibility (T&C) assessment is 'A'.

On May 15, 2012, the agency published our methodology to link short-term and long-term ratings for corporate and sovereign issuers.

According to the revised criteria, the short-term rating on a sovereign government is derived directly and solely from the long-term rating.

As a result, the upgrade does not reflect an improvement in the agency's view of Bulgaria's short-term creditworthiness.

"The ratings on Bulgaria reflect our view of the government's strong track record of appropriate fiscal policy and low gross and net general government debt, as well as the country's solid medium-term growth prospects," the agency said in a statement.

It points out that the developments in Bulgaria come despite the expected slowdown in 2012--particularly if backed by improving absorption of EU funds and other benefits stemming from EU membership.

These strengths however are offset by Bulgaria's relatively low GDP per capita and still-large, albeit correcting, stock of external imbalances and related risks, given the adverse economic backdrop, the agency added.

The stable outlook reflects its view that Bulgaria's authorities will continue to maintain a favorable fiscal position on the back of ongoing budgetary consolidation and structural reforms, despite the likely slowdown in economic growth prospects and against its gross external debt position.

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