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28.07.2008
Development of the construction sector in 1H2008: growing appetite but decreasing ratings
In January-June 2008 Credit-Rating assigned 58 credit ratings to bond issues in the construction sector for the total amount of UAH 10.2 billion that exceeds the total amount of bond issues in the construction sector over 1H2007 in two times.
According to Credit-Rating the reliability of new issues is a little higher compared to issues made over 1H2007. According to the results of January-June 2008, 19% of total ratings assigned have investment grade. Over the same period in 2007 this index was 14%. Minor increase in the issues quality can be explained by appearance of such investors as Krug-budinvest LLC, Keramist Transnational Trade Corporation, Zoloti Vorota Corporation and others. Besides, large companies such as Eksko Plus LLC, Integra-Holding LLC and Planeta-Bud CJSC have entered the loan market for the second time.
At the same time, share of the investment grade ratings in the construction sector is the lowest compared to other branches of the economy. General trend towards the decrease of the early assigned ratings shows the continuing worsening of the reliability of debt instruments issued by the construction companies. For example, over 1H2008 9 ratings were downgraded, 6 outlooks were changed from stable to negative and there were no positive outlooks in the construction sector. In January-June 2007 these indicators were much better: none of ratings was downgraded and there were no negative outlooks.
The key reason of changes took place in the current year is the delay in taking the construction objects into use and, respectively, the probability of untimely fulfillment of the obligations of the bond issuers. According to Credit-Rating`s deputy CEO Grigoriy Pererva, In 1H2008 up to 70% of the housing bonds issuers with credit rating assigned has revised the schedules of construction works`.
Present trends confirm Credit-Rating`s outlooks about possible worsening of the situation in the construction sector. Today Credit-Rating is carrying out a deep analysis of the current situation in the construction sector and of interrelations between present trend with situations in other branches of economy, as well as their consequences in mid-term.
For more information, please contact:
Information and Communication Department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
