print
25.07.2007
Bond issue by Renessans LLC assigned uaB- credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaB- (uaB minus) long-term credit rating to UAH27.6m 2.5 year issue of registered housing bonds (A series) by Cherkasy-based Renessans Architectural and Construction Centre (Issuer or company). The company's primary activity is investment and construction. Today the company implements a construction project in the city of Cherkasy. In the course of analysis Credit-Rating considered Issuer's financial statements for 2002-2006 and 1Q2007 as well as other inside information furnished by the company.
A credit rating of uaB is a speculative grade rating, indicating a debt liability that has a HIGHER DEFAULT POSSIBILITY on the payment of principal and interest than a uaBB rating. This rating indicates that adverse changes in the business, financial or economic conditions in the Ukrainian financial market environment may negatively affect the obligors capacity and willingness to meet in full its commitments on the given debt liability. The plus (+) or minus (-) modifier denotes ratings relative status within major categories.
Factors maintaining the credit rating:
- The issue is to be redeemed by residential premises in the complex based in S.Zhuzhomy str., the city of Cherkasy, which construction readiness made up 12% as of 2007 June-beginning;
- The Issuer is involved in organizing and financing the residential construction in the city of Cherkasy, where real estate prices and demand have been growing over the past 3 years.
Factors constraining the credit rating:
- The Issuer does not have experience in residential construction, neither in bonds redemption;
- The right for rent of the site the residential complex is to be constructed on, and which is to be financed by the funds raised from the bond's placement has been delivered to a third party by the contract of guarantee;
- The planned issue size of UAH27.6m exceeds 6x Issuer's asset balance of UAH4.6m as of March 31, 2007;
- Issuer's negative equity as of Dec. 31, 2006 and of March 31, 2007, which amounted to UAH(-)182.5K and UAH(-)214.4K respectively;
- 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
