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24.10.2007
Credit-Rating assigns city Mykolayiv`s upcoming bond issue uaBBB
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today assigned UAH50m 5-year bonds issued by Mykolayiv city council a long-term credit rating of uaBBB with stable outlook. The agency has also affirmed City`s rating at uaBBB/Stable outlook. In the course of analysis Credit-Rating considered City`s key figures for 2002-2006 and 1H2007 as well as other inside information furnished by the city council.
An obligor or a debt liability with uaBBB credit rating is characterized with the SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is affected by adverse changes in commercial, financial and economic conditions.
`Stable` outlook indicates that there are no anticipated reasons to change the rating in the course of the year.
Factors maintaining the credit rating
- City`s budget incomes grew 31.1 per cent in 1H2007 as compared with the previous budget period accompanied by availability of free funds in the city budget. This resulted in unnecessity of attracting funds in 2006 and 1H2007 for covering temporal cash spreads.
- City`s social development indicators grew in 2002-2006 and 1H2007, namely average salary, number of employees coupled with decrease in unemployment to 0.8 per cent in 1Q2007, which is 2.9x lower than that average of the country.
- City`s key economic indicators grew in 2002-2006 and 1H2007, namely industrial production sales, export turnover, foreign direct investments, investments in fixed capital, retail turnover.
- The City does not have a direct debt as at July 1, 2007 coupled with its modest planned growth, in fact the city budget`s debt burden will account for less than 1 per cent in case the planned bond issue is placed in full.
Factors constraining the credit rating
- City budget`s revenues are dependant upon incomes from individuals` tax (the specific gravity of this source in total budget incomes excluding transfers accounts for over 70 per cent) coupled with the low salary growth rates in 2002-2006 as compared to the similar country`s average figures.
- The city experiences an inflow of levelling subsidy from the State budget, which specific gravity in city budget planned incomes accounts for 8 per cent.
- High deterioration of city`s main funds, including housing sector, utility and transport infrastructure, which requires significant investments for their renovation.
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
