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27.11.2007
Credit-Rating: Kashtanove Misto`s upcoming bonds assigned uaBB-
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today assigned a long-term credit rating of uaBB- (uaBB minus) to UAH119.5m 5-year registered housing bonds (E-P series) to be issued by Kiev-based Kashtanove Misto LLC (`Issuer` or `company`). The company`s primary activity is investing and construction. Today the company constructs a residential complex in the city of Kiev. In the course of analysis Credit-Rating considered Issuer`s financial statements for 2003-2006 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 enjoys experience of construction a residential complex in Verkhovinnaya str., city of Kiev with 24.1K sq.m. overall area of apartments and has redeemed UAH26.1m housing bonds of A-B series by 8.3K sq.m. of residential premises and 31 parking lots.
- The Issuer is engaged with organizing and financing the construction in the city of Kiev, where real estate prices and demand have been growing over the past few years.
Factors constraining the credit rating
- Risks imposed by the size of the project in 4Б, Shamryla str., city of Kiev, which premises are to redeem the upcoming bond issue, in fact the overall area of the premises makes up 32K sq.m. which exceeds 1.3x the area of the premises built by the Issuer hitherto. The estimated cost of the construction amounts to UAH220.3m. The works on construction of the ground floor are underway as of Oct. 15, 2007.
- Issuer`s negative equity during 2003-2006 and 1H2007, which accounted for UAH(-)21.6m as of Jun.30, 2007 entailed by Issuer`s detrimental performance in the past 5 years (the uncovered loss makes up UAH21.9m as of Jun.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 National Scale may be found in REUTERS, BLOOMBERG and FTN MONITOR information systems.
For more information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
