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26.07.2007
Bond issue by Cherkassyzhelezobetonstroy LLC assigned uaB credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaB long-term credit rating to UAH54m 8-year issue of registered discount bonds by Cherkasy-based Cherkassyzhelezobetonstroy LLC (Issuer or company). The company's primary activity is investment and construction. Being incorporated with the Dobrobud group of companies, the company today implements 3 investment and construction projects 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 obligor's capacity and willingness to meet in full its commitments on the given debt liability.
Factors maintaining the credit rating:
- The Issuer is incorporated with Dobrobud group of companies, which has an experience in conducting the construction and assembling and other works: starting from 1995 the Issuer as a general contractor has implemented 10 projects on residential construction, 7 projects on reconstruction and renovation of buildings in the cities of Cherkasy, Kiev, and Sevastopol.
- The Issuer is involved in construction in the city of Cherkasy, where real estate prices and demand have been growing over the past few years.
Factors constraining the credit rating:
- Issuer's activity in the framework of Dobrobud group of companies may impose risks of redistribution of production facilities and of cash flows within the group neglecting Issuer's interests and makes the Issuer vulnerable to risks of the entire group.
- Dependence of the group's performance upon size of projects and order portfolio, which, in their turn, are constrained by the growing competition on the construction market.
- The planned issue size 35% exceeds Issuer's asset balance and 6x exceeds Issuer's equity as of March 31, 2007.
- Volatility in legislation and taxation on operations associated with construction and with cash attraction.
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
