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07.08.2007
Upcoming bond issue by Agrotrade 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 UAH12.7m 3-year issue of registered housing bonds (A-D series) by Kharkiv-based Agrotrade LLC (Issuer or company). The company's primary activity is investment and construction. Today the company implements an investment and construction project in the city of Kharkiv. 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 incorporated with the group, which companies have experience in
investment and construction projects; in fact
Velton Construction Company LLC as a general contractor has built 4 buildings of 23.8K sq.m. total floor area with a 28K sq.m. residential complex to be finished soon; Velton LLC has also conducted works for UAH51.7m in 2000-2006; - The Issuer is engaged in organizing and financing the construction in the city of Kharkiv, where real estate prices and demand have been growing over the past few years.
Factors constraining the credit rating:
- The group's companies do not have experience in housing bonds redemption;
- The planned issue is to be redeemed by residential premises in 50-52, Chernishevskogo str., city of Kharkiv, which construction is currently on the initial stage;
- The size of issue to be redeemed by all residential premises and parking lots in the building is insufficient for covering all expenses amounting to only 2/3 of the project cost;
- The planned issue size of UAH12.7m exceeds 6x Issuer's asset balance of UAH2.1m as of March 31, 2007;
- Issuer's detrimental performance, specifically its uncovered loss amounted to UAH(-)210.7K 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
