print
02.08.2007
Bond issue by Real-Invest LLC assigned uaBB credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaBB long-term credit rating to UAH63.1m 1-year issue of registered housing bonds (A-J series) by Odessa-based Real-Invest LLC ('Issuer' or 'company'). The company's primary activity is investment and construction. Today the company constructs a residential complex in the city of Odessa. In the course of analysis Credit-Rating considered Issuer's financial statements for 2003-2006 and 1Q2007 as well as other inside information furnished by the company.
A credit rating of uaBB is a speculative grade rating, indicating a debt liability that is the LEAST AFFECTED BY THE RISK OF NONPAYMENT of the principal and interest among speculative grade ratings. This rating indicates that the obligor may not be able to meet in full its commitments on the given debt liability on a timely basis in the event of adverse changes in the business, financial or economic conditions in the Ukrainian financial market environment. However, the possibility of nonpayment in the near future is considered to be low.
Factors maintaining the credit rating:
- The Issuer is associated with the UGK Diamant LLC, which has experience in conduction the construction works, in fact Diamant LLC has constructed an office centre of 3.2K sq.m. with other 4 buildings of 167.5K sq.m. being under construction. The construction readiness of 1 of them is 95% as of June 1, 2007; the Issuer has conducted works for total amount of UAH84.5m over the past 3 years;
- The Issuer operates in the robust real estate market of Odessa, which is filled by high demand for residential and commercial premises.
Factors constraining the credit rating:
- The Issuer does not have experience in housing bonds redemption;
- The planned bond issue is to be redeemed by residential premises in the complex in Bocharova str., Odessa, which construction is currently on the initial stage;
- Risks imposed by the project size, in fact the overall floor space of the building to be financed by the funds raised from the bond's placement makes up 72.1K sq.m. The estimated cost of the project accounts for UAH311.5m, with the issue size being UAH63.1m; UAH32.4m has been invested as of March 31, 2007;
- The planned issue size of UAH63.1m 1.8x exceeds Issuer's asset balance of UAH32.4m 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
