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07.06.2007
Bond issue by city of Lutsk assigned uaBBB+ credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaBBB+ (uaBBB plus) long-term credit rating to the 3-year bond issue for UAH10m by city of Lutsk. Outlook on the rating is Stable. To assign the rating Credit-Rating used City`s financial statements for 2002-2006 as well as other inside information furnished by the city council.
The uaBBB issue rating reflects City`s adequate capacity to timely and in full meet its commitments on the obligations in the Ukrainian financial market environment. There is, though, a higher vulnerability to the effect of adverse changes in business, financial and economic conditions as compared to obligors with higher ratings. The + and - modifiers denote rating`s relative status within major categories.
Stable Outlook denotes that there are no anticipated reasons to change rating in the course of the year.
Factors maintaining the credit rating
- Growth in City`s budget incomes resulting in 28.6% decrease in leveling subsidies in 2007.
- The City does not have a direct debt as of Jan. 1, 2007 in line with its moderate growth during 2007.
- Growth in City`s key indicators during 2002-2006, with the 2006 per capita indicators exceeding those average of Ukraine, specifically of production sales, of investments into fixed capital, of foreign direct investments, of retail turnover.
- Positive dynamics of key indicators indicating the City`s social development during 2004-2006, specifically growth in population, growth in number of permanent employees, decrease in unemployment.
Factors constraining the credit rating
- City`s dependency upon transfers from the State budget, specifically upon leveling donations, which specific gravity in the budget incomes amounted to 19.4% in January-November 2006.
- High concentration of industrial production sales on two City`s companies
Lutsk Automobile Plant OJSC and SKF Ukraine OJSC. - High level of deterioration of main funds, including utility facilities, and necessity in capital investments into city`s infrastructure (roads, lights, roofs etc.)
Information on all the credit ratings assigned in accordance with the Ukrainian national scale may be found in the REUTERS, BLOOMBERG and FTN MONITOR information systems.
For further information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
