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17.10.2007
Credit-Rating assigns Volynvneshtorgkhleb`s upcoming issue uaBB+
Credit-Rating a nationally recognized credit rating agency in Ukraine has today assigned UAH13m 3-year issue of registered housing bonds (A series) by Lutsk-based Volynvneshtorgkhleb LLC (`Issuer` or `company`) a long-term credit rating of uaBB+ (uaBB plus). The company`s principal activity is baked goods production and selling, as well as conducting reconstruction and renovation works. In the course of analysis Credit-Rating considered Issuer`s financial statements for 2004-2006 and 1H2007 as well as other inside information furnished by the company.
An obligor or a debt liability with uaBB credit rating is characterized with the LOWER THAN SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is strongly affected by adverse changes in commercial, financial and economic conditions. The plus (+) or minus (-) modifier denotes rating`s relative status within major categories.
Factors maintaining the credit rating
- The Issuer has experience as a general contractor in reconstruction; in fact it has rendered the services for UAH16.7m in 2006 and 1H2007.
- The planned issue is to be redeemed by residential premises in 13A, Shevchenka str. Lutsk, with 60 per cent readiness as of August-end 2007 (funded by UAH11.8m).
- The Issuer is engaged in organizing and financing the homebuilding in the city of Lutsk, where real estate prices and demand have been growing over the past few years.
- The Issuer is also engaged in baked goods production and selling having 1/3 of Lutsk`s bred market, which enables the Issuer to diversify its income sources, specifically the Issuer gained UAH9m net sales from this activity in 2006 (UAH1m in 2004).
Factors constraining the credit rating
- The Issuer does not have experience in investment and construction projects as a customer, neither in housing bonds redemption.
- The issue size of UAH13m exceeds significantly Issuer`s equity of UAH0.4m as of June 30, 2007.
- Instability in legislation and tax environment controlling both the construction industry and project financing.
Information on all 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
