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27.07.2010
Credit-Rating Assigns Odessa City Council’s Upcoming Bonds uaA-
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today announced that it assigned a long-term credit rating of uaA- (uaA minus) to coupon bonds to be issued by Odessa city council (‘city’). The amount of the issue is UAH400m, with 5-year original maturity. Credit-Rating has also resumed city’s long-term credit rating of uaA- (uaA minus) which was previously suspended. The outlook on the ratings is stable. In the course of the rating procedure Credit-Rating considered city’s social and economic, and financial indicators for 2005-2009 and other 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. 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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Moderate provisioning in the city budget: the estimated amount of revenues to the city budget’s general fund exclusive of transfers per inhabitant was recorded in 2009 at UAH1240.4 (UAH1341.9 in 2008).
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Certain city’s economic indicators calculated per capita are in excess of the corresponding national figures, specifically of fixed capital investments – 1.7 times; external turnover of goods – 1.8 times; homes commissioned – 2.9 times.
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No concentration in the budget receipts by principal tax-payers.
Factors constraining the credit rating
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Decline in the city budget revenues coupled with poor fulfillment of the planned revenues in 2010 due to the crisis in Ukraine’s economy.
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High level of consolidated debt under low budget’s liquidity and dependency upon loans from the general treasury account.
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The level of monthly average salary in the city in 2009 was lower than the national average accompanied by high city budget’s dependency upon receipts from individual income tax (the specific gravity of this source in the revenues of the city budget’s general fund exclusive of transfers was recorded at around 65%).
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High deterioration of city’s fixed assets, including the housing sector, utilities and transport infrastructure, which require significant investments for their renovation combined with high population’s arrears for utilities services.
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
