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22.12.2009
Credit-Rating assigns City of Smela uaBB+
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today announced that it assigned its long-term credit rating of uaBB+ (uaBB plus) to the city of Smela (‘city’). In the course of the rating procedure Credit-Rating considered city’s social and economic, and financial indicators recorded in 2004-2008 and 1H2009, and other information furnished by the city council.
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. A plus "+" and a minus "-" signs indicate intermediary categories compared to the standard categories (grades).
Stable outlook indicates that there are no anticipated reasons to change the rating in the course of the year.
Factors maintaining the credit rating
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High pace of receipts to the city budget’s general fund excluding transfers (at 125.8%-131.1%) recorded in 2005-2008 and sufficient fulfillment of the annual plan by this indicator in 1H2009.
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The city council has no direct debts as at Dec. 1, 2009 combined with its low planned growth: in case of a loan raising, the direct debt burden will be at 2.2% of the amount of city budget’s general fund excluding transfers planned for 2009.
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The city hosts large railway station Shevchenka and structural divisions of Odessa railways, which is the biggest region’s employer.
Factors constraining the credit rating
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Dependency of the city budget upon equalization grants from the state budget, which ratio to the receipts to the city budget’s general fund was recorded at 41.1% in 2008, with this figure advanced to 59.4% in 1H2009.
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High concentration of the budget revenues by principal tax-payers (10 biggest taxpayers contributed 48.5% of revenues to the city budget’s general fund excluding transfers in 1H2009).
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The level of monthly average salary in the city is lower than that in the country (in 2004-2008 and 1H2009) coupled with high dependency of the city budget revenues upon receipts from the individual income tax (the specific gravity of this source in the revenues of the city budget’s general fund excluding transfers was recorded at around 80%) and with deterioration in the labour market in 1H2009.
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High deterioration of city’s utilities and transport infrastructure and of housing sector accompanied by necessity in considerable investments for their renovation.
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The majority of the city’s key figures calculated per capita were lower than the country’s averages in 2004-2008 and 1H2009.
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
analytic department
Sergey Rozumyak +38044490 25 50
SRozumyak@credit-rating.com.ua
Denis
Rudenko
DRudenko@credit-rating.ua
