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30.05.2007
Credit rating of the city of Odessa upgraded to uaA-
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today upgraded to uaA- (uaA minus) from uaBBB- (uaBBB minus) the long-term credit rating assigned to the city of Odessa (`City`). Outlook on the rating is Stable. In the course of analysis Credit-Rating used City`s financial statement for 2006 as well as other inside information furnished by the city council.
The uaA long-term rating reflects strong City`s capacity to pay its obligations in the Ukrainian financial market environment, it may, though, be more vulnerable to adverse changes in economic, financial and business conditions than obligors rated uaAA and uaAAA. The `+` and `-` modifiers denote rating`s relative status within major categories.
Stable Outlook exhibits that there are no anticipated reasons to change rating in the course of the year.
Factors maintaining the credit rating
- City`s enhanced direct debt structure and City budget`s direct debt burden lowered to
16.7% in 2006 (43.4% in 2005) as well as its moderate growth planned
for 2007 (to 20.6%). - City`s decreased dependency on transfers from higher-level budgets.
The 2007 City budget does not envisage the leveling subsidies from the State budget. - City budget`s increased flexibility, specifically grown volume and specific gravity of non-tax budget incomes as compared to 2005, in fact 2.2x and 8.3 p.p respectively at the expense of new income sources.
- Retention of positive development tendencies of the labour market in 2006 as compared
to 2005, in fact the number of employees (excluding small businesses) grew 3.9%, with the
registered unemployment remaining one of the lowest in Ukraine amounting to 0.3%. The
weighted average salary grew 24.6% and amounted to UAH1,072.1 as of
Jan. 1, 2007 (country`s average is UAH1,041.4). - Further growth of a number of indicators in 2006, specifically of retail turnover, of investments into fixed capital, of foreign investments, and of residential premises constructed.
- Grown efficiency in city`s land fund utilization and city-owned objects, in fact the income from land fees grew 1.8x as compared to 2005, with the rental fee increased by 13.8%.
Factors constraining the credit rating
- The sales of industrial production declined by 18.9% and of foreign trade by 7.7% as compared to 2005.
- High deterioration of utility infrastructure, which renovation requires significant investments in line with the population`s indebtedness for utility services grown by 41.8% to UAH212.5m in 2006.
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
