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13.07.2007
Bond issue by Solidarnost LLC assigned uaBBB- credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaBBB- (uaBBB minus) long-term credit rating to UAH60.5m 1 1/2-year issue of registered housing bonds (D-J series) by Kiev-based Solidarnost LLC (`Issuer` or `company`). The company`s principal activity is investment and construction. Today the company constructs a residential building in the city of Kiev. In the course of analysis Credit-Rating considered Issuer`s financial statements for 2002-2006 as well as other inside information furnished by the company.
A credit rating of uaBBB is an investment grade rating, indicating an ADEQUATE CAPACITY of an obligor to pay both interest and principal on the given debt liability in the Ukrainian financial market environment. This rating indicates a level of creditworthiness that is more susceptible to adverse changes in commercial, financial and economic conditions than debt obligations with higher investment grade ratings. The plus (+) or minus (-) modifier denotes rating`s relative status within major categories.
Factors maintaining the credit rating
- The Issuer is involved in construction of commercial and cultural real estate, in fact the Issuer has constructed 4 buildings of 35.3K sq.m. since 1995.
- Growth in company`s net sales during 2003-2006 to UAH37.1m from UAH30.7m, coupled with the increased EBITDA to UAH13.4m from UAH11m, with its profitability being a. 36%.
- The planned issue is to be redeemed by residential and non-residential premises in 53-б Geroyev Stalingrada av., with the volume of investments amounting to 9.8% of the object`s estimated value as of May 1, 2007.
Factors constraining the credit rating
- The Issuer does not have experience in housing bonds` redemption.
- The planned issue size of UAH60.5m 2.7x exceeds Issuer`s equity of UAH22.5m
- Decline in Issuer`s financial strength indicators, specifically the financial independence ratio decreased to 0.18 from 56.9 during 2003-2006.
- 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 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
