OREANDA-NEWS. Fitch Ratings has revised the Outlook on Poland-based Zaklad Komunikacji Miejskiej w Gdansku Sp. z o. o. (ZKM) to Stable from Positive while affirming the Long-Term Local Currency Issuer Default Rating (IDR) at 'BBB'. A full list of ratings is at the end of this commentary.

KEY RATING DRIVERS

The rating action follows the recent revision of Outlook of the Long-Term Local Currency IDR to Stable from Positive of the Polish City of Gdansk (A-/Stable; AA(pol)/Positive), ZKM's sole owner (see 'Fitch Revises Outlook to Stable on City of Gdansk's Long-Term Local Currency IDR on Sovereign Rating Action' dated 28 July 2016 at www. fitchratings. com).

ZKM's ratings are two notches lower than the city (see 'Full Rating Report on ZKM dated 30 November 2015 at www. fitchratings. com).

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

RATING SENSITIVITIES

ZKM's ratings could be downgraded if the links between ZKM and the City of Gdansk weaken. A downgrade of Gdansk's ratings could also impact ZKM. The revenue bonds may be downgraded if their status in the capital structure weakens or if liquidity of ZKM's venture accounts for servicing the revenue bonds deteriorates.

ZKM and its revenue bonds may be upgraded if the City of Gdansk's ratings are upgraded, assuming ZKM's and its revenue bond programmes' links with the city remain as strong, or if the programmes benefit from an explicit guarantee by the city.

The current ratings are as follows:

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

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

ZKM's PLN220m tram revenue bond programme and its bonds':

- Long-term local currency rating: 'BBB+'

- National Long-term ratings: 'AA-(pol)'.