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07.11.2008
Credit-Rating: World financial crisis will negatively affect the agricultural sector of Ukraine
In Credit-Rating`s view the global financial crisis will negatively affect solvency of the companies operating in Ukraine`s agricultural sector.
The activities of agricultural companies are of seasonal nature, which mirrors in discrete cash flows from sales. Lack of working funds, which arises from seasonal factors, is covered with short-term borrowings. Credit-Rating believes that limited access to funding and sharp decline in prices for certain types of produce may prompt liquidity problems in some companies.
The prolongation of special taxation regime in the agricultural sector pursuant to the Law of Ukraine #639-VI dated Oct. 31, 2008 is insufficient for retention of strength of agricultural companies in the aggravated environment of the national economy. Specifically, according to Credit-Rating`s head for agricultural sector Ekaterina Vasina `it would be rational to develop and implement protecting procedures for agricultural companies, which is associated with sharp decline in prices for certain types of agricultural produce accompanied by eroded population`s purchasing capacity`.
Considering the said, Credit-Rating does not exclude that it will downgrade credit ratings and/or outlooks assigned to entities operating in the agricultural sector, taking into account their vulnerability to negative trends in the market and the risks of refinancing their obligations under the financial crunch.
Credit-Rating agency has operated in the Ukrainian market since 2001 being committed to assignment of the national scale ratings. The agency has assigned 949 ratings, specifically to 729 Ukrainian companies (with 29 of them operating in agricultural sector), 163 financial institutions and 56 municipalities and their debts, and 1 corporate governance rating.
For more information, please contact:
Information and Communication Department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.ua
