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10.01.2008
Credit-Rating assigns Podillya`s bond issue uaBB-
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today assigned a long-term credit rating of uaBB- (uaBB minus) to UAH15m 3-year registered coupon bonds (A series) to be issued by Vinnitsa-based Podillya Concern (`Issuer` or `company`). The company`s primary activity is investing and construction. Today the company constructs Podillya residential district situated in the city of Vinnitsa. In the course of analysis Credit-Rating considered Issuer`s financial statements for 2004-2006 and 9M2007 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 is a company specially established for centralized utilization of funds of participants, who have built 25 residential buildings of 174.3K sq.m. and 8 non-residential buildings of 15K sq.m. in 2003-2007, which empowered them to have a 50 per cent share of Vinnitsa`s construction market.
- The Issuer has at its disposal production facilities and structural subdivisions, which allows the company to service the construction process on all stages and to supply the construction with the own-produced construction materials.
- The SMU-3 LLC (which is incorporated with Podillya Concern) enjoys an order portfolio scheduled through 2009-end estimated over UAH580m, specifically over 125K sq.m. of residential and commercial premises are to be delivered.
- The Issuer is engaged with investing and construction in the city of Vinnitsa, where real estate prices and demand have been growing over the past few years.
Factors constraining the credit rating
- The planned issue size of UAH15m exceeds 6.3x the Issuer`s equity of UAH2.4m as of Sep. 30, 2007 and almost 4x the net sales profit of UAH3.8m gained in 2006 and 9M2007.
- The Issuer has no development strategy for the period of bonds` original maturity.
- Risks of redistribution of production facilities and cash flows between Issuer`s participants neglecting Issuer`s interests, which makes the Issuer vulnerable to risks of participating companies.
- 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 and BLOOMBERG information systems.
For more information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
