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13.12.2007
Credit-Rating assigns city of Boryspil uaA
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today assigned a long-term credit rating of uaA to the city of Boryspil (`City`). Credit-Rating has also assigned a long-term credit rating of uaA to City`s UAH9m 5-year issue of coupon bonds (A series).
The outlook on both ratings is Stable. In the course of analysis Credit-Rating considered City`s social- economic and financial indicators for 2002-2006 and 1H2007 as well as other inside information furnished by the city council.
An obligor or a debt liability with uaA credit rating is characterized with the HIGH STRONG creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is susceptible to 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
- The City`s geographical position which is situated 35 km from the city of Kiev with the biggest Ukraine`s international airport based nearby: Boryspil International Airport and companies based on its territory are the largest region`s employers contributing significantly tax and other payments to the region`s budget.
- High liquidity of the City budget, in fact the rest of the budget funds as of Jul.1, 2007 including the funds deposited account for 28.6 per cent of the planned budget expenditures in 2007.
- High growth rates of budget incomes excluding transfers witnessed in the past 2 years, specifically the 2006 incomes exceed 38.7 per cent and 1H2007 exceed 2.1x those of the previous years.
- High implementation of the budget income annual plan excl. transfers in 2006 (108.9 per cent) and 1H2007 (77.8 per cent year-on-year).
- The City does not have a direct debt as of Jul.1, 2007 with its modest planned growth, in fact the estimated direct debt burden on 2007 budget, in case the bond issue is placed in full, will amount to 11.8 per cent of the City budget incomes excl. transfers.
- Growth in City`s key economic indicators in 2002-2006, namely the investments in fixed capital increased 5.1x to UAH766.2m (5.1x exceeds the per capita country`s average), the retail trade grew 2.3x to UAH343.3m (2.3x exceeds the per capita country`s average), homes delivered - 3.5x to 45.4K sq.m. (4.4x exceeds the per capita country`s average). Such growth trend retained in 1H2007.
- The City`s social development indicators have improved in 2002-2006 and 1H2007, specifically the average number of employees (excluding small businesses) grew 33.4 per cent to 19.1K persons, which accounted for 33.7 per cent of the entire City`s population; the monthly average salary advanced 2.9x to UAH2,044, which exceeds 1.7x the national average indicator with low (0.8 per cent) unemployment rate retained being lower than the national average of 2.3 per cent.
Factors constraining the credit rating
- High deterioration of main funds, including utilities and transport infrastructure, which requires significant investments for their renovation.
- Limited capacity for capital injections in City`s development budget associated with the modest number of municipal-owned property to possibly be sold.
- Possible slowdown in growth rates of budget incomes resulted from limited number of tax-payers.
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
