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19.06.2007
Upcoming bond issue by Stroitelnyi torgovyi dom assigned uaB+ credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaB+ (uaB plus) long-term credit rating to the upcoming UAH27.6m 10-year issue of registered discount bonds by Kharkiv-based Stroitelnyi torgovyi dom LLC (`Issuer` or `company`). The company`s principal activity is the construction organizing. Today the company constructs a residential building in city of Kharkiv. In the course of analysis Credit-Rating used Issuer`s financial statements for 2006-1Q2007 as well as other inside information furnished by the company.
The uaB issue rating reflects higher default possibility than of the uaBB rating, though in this case the obligor`s capacity is adequate to pay its obligations in the Ukrainian financial market environment. This debt liability is more affected by the adverse changes in business, financial and economic conditions than debt liabilities with higher ratings. That may negatively affect the obligor`s capacity and willingness to fully and timely pay interest and principal on obligations.
The plus (+) or minus (-) modifier denotes rating`s relative status within major categories .
Factors maintaining the credit rating
- The Issuer is associated with Stroitelnyi torgovyi dom JSC (STD), which has experience in construction, specifically the STD has constructed 4 residential buildings of 27.8K sq.m. and conducted the construction works for UAH20m over the past 3 years.
- The Issuer is involved in organizing and financing the constriction in the city of Kharkiv, where real estate prices and demand have been growing over the past few years.
Factors constraining the credit rating
- High Issuer`s dependency upon STD, which performance is dependant upon projects` size and order book, as well as upon growing competition on the market it operates in.
- The planned issue size of UAH27.6m over 5x exceeds Issuer`s and STD`s consolidated asset balance of UAH5m.
- Both STD`s and Issuer`s detrimental performance, in fact their consolidated uncovered loss amounted to UAH(-)185K.
- The Issuer was registered in October 2006 and has not been involved in financial and economic activity ever since.
- Volatility in legislation and taxation on operations associated with construction and with attraction of funding.
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
