Moody's changed the outlook of the Zagrebacki Holding d.o.o. to positive from stable

2. May 2019. Moody's Public Sector Europe ("MPSE" or "Moody's") has changed the outlook of the City of Zagreb and its 100%-owned utility company, Zagrebacki Holding D.O.O. (Zagrebacki Holding or Holding), to positive from stable. At the same time, Moody's has affirmed the Ba2 long-term issuer ratings of both entities.

Moody's rating action on the City of Zagreb reflects (1) the improvement in the operating environment for Croatian sub-sovereigns, as captured in the rating action on the sovereign bond rating; and (2) the city's good budgetary management and sound financial fundamentals, which have ensured a high self-funding capacity and a low direct debt burden.