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12.06.2007
Credit rating to city of Kharkiv affirmed at uaA
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today affirmed the uaA long-term credit rating assigned to city of Kharkiv (`City`) and the uaA+ (uaA plus) long-term credit rating assigned to 3-year UAH 100m bond issue by Kharkiv city council. Outlooks on both ratings are Stable. In the course of analysis Credit-Rating used City`s financial and economic indicators 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
- Growth in City`s 2006 indicators of economic development as compared to 2005, specifically those of industrial production sales by 19.4%, of investments into fixed capital by 49.1%, of residential premises constructed by 14.3%, of retail turnover by 32.7%.
- Decrease in 2006 registered unemployment by 0.1 p.p. to 0.7%, which is 3.9x lower than that average of Ukraine, entailed by growth in number of employees and in month salary as compared to 2005.
- The budget revenues excluding transfers have grown 19.1% as compared to the previous year.
Factors constraining the credit rating
- Non-fulfillment in 2006 of city budget planned fixed incomes derived from failure to execute the plan on natural persons` taxation.
- Growing dependency of the city`s consolidated budget on attraction of short-term loans for covering the short-term cash spreads.
- The weighted average salary is 1.4% lower than that average of the country; in fact during 2006 the debt on salaries grew 2.7x to UAH25.4m.
- According to 2006 totals, certain per capita indicators of city`s economic development (industrial production sales, foreign trade turnover, residential premises constructed) are lower than those averages of Ukraine.
- High deterioration of main funds, including the utility infrastructure entailed by need in significant investments for city`s renovation of infrastructure with the population`s debt for utility services having grown 29.3% 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
