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11.09.2006
Credit-Rating expands application of National credit rating scale for special-purpose bonds for construction financing
Credit-Rating agency introduced new characteristics of credit ratings assigned according to National scale to special-purpose bond issues for construction financing. The innovations relate to speculative level credit ratings which evaluate the Issuers capability to timely and complete fulfill its debt obligations but now also characterize a maximum probable period of delay in fulfillment of obligations in case of default. Default on special-purpose bonds is Issuers incapability to timely and fully meet its obligations to transfer ownership of real estate to bondholders.
Speculative level of the scale includes uaBB, uaB, uaCCC, uaCC and uaC rating categories, which reflect high risk due to Issuers worse possibilities to meet its obligations compared to debt obligations of investment level. uaBB ratings are assigned to obligations with the least risk in this group, uaC ratings to the highest risk.
In accordance with the innovations, uaBB credit ratings (includes uaBB+, uaBB, uaBB- ratings) indicate that in case of Issuers default on special-purpose bonds there is a possibility of their full redemption within 6 following months.
uaB ratings (uaB+, uaB, uaB-) indicate that in case of Issuers default on special-purpose bonds, there is a possibility of their full redemption within 12 following months.
uaCCC ratings (uaCCC+, uaCCC, uaCCC-), uaCC (uaCC+, uaCC, uaCC-) and uaC indicate that in case of Issuers default on special-purpose bonds, the delay in their redemption might exceed 12 months, with probability of incomplete fulfillment or failure to fulfill these obligations increasing greatly.
Credit-Rating agency assigned 193 ratings to special-purpose bonds for construction financing in the total amount of UAH 10.3 bln, with debt obligations in the amount of UAH 9.6 bln having speculative category ratings.
In compliance to Law #3201, the reserves of insurance companies and assets of non-state pension funds cannot be placed in securities of speculative level ratings.
For more detailed information, please contact us.
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