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14.04.2008
Credit-Rating assigns City of Vinnitsa`s upcoming bond issue uaBBB-
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today announced that it assigned a long-term credit rating of uaBBB- (uaBBB minus) to coupon bonds payable to bearer, to be issued by Vinnitsa City Council (`City`). The amount of the issue is UAH10m, due Dec. 31, 2011. In the course of analysis Credit-Rating considered City`s social-economic and financial indicators as well as its other inside information.
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. A plus + and a minus - signs indicate intermediary categories compared to the standard categories (grades).
Factors maintaining the credit rating
- The incomes (excluding transfers) in the budget`s general fund has been growing at rapid rates over the past 3 years, specifically the amount of incomes in 2005, 2006, and 2007 exceeds 32.6%, 41.9%, 46.2% respectively to those of the previous budget periods.
- Low City`s direct debt burden as of Jan. 1, 2008 (8.1% of the budget incomes excluding transfers) with its moderate growth expected further: the debt burden will make up 7.2% of the budget incomes planned for 2008, had the issue is placed in full.
- The majority of City`s key figures have been stably growing over 2004-2007, namely the retail sales advanced 2.8x to UAH2.3bn, the industrial production sales grew 2.4x to UAH2.1bn, the foreign direct investments increased 3.9x to USD60.6m.
- The City`s key social development indicators have improved over 2004-2007, namely the number of employees (excluding small businesses) grew by 7.3% to 108.4K, which accounts for 29.6% of the overall City`s population, accompanied by low unemployment rate of 1.4 percent, which is lower than that national of 2.4 percent.
Factors constraining the credit rating
- The City is dependant upon transfers from the State budget, namely leveling subsidies, which ratio to budget`s incomes (excl. transfers) made up 7.1% in 2007, coupled with its expected growth to 10% in 2008.
- The monthly average wage in the City in January-December 2007 is 10.4% lower than that national average accompanied by budget incomes` dependency upon gains from individuals` tax, with this source accounting for 77.3% of the budget incomes (excl. transfers).
- High deterioration of City`s fixed assets, including the housing sector, utilities and transport infrastructure, which requires significant investments for their renovations.
Information on all credit ratings assigned in accordance with the National Rating Scale may be found in REUTERS and BLOOMBERG Information Systems.
For more information, please contact:
Information and Communication Department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
