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17.11.2006
The forthcoming bond issue by the LLC “Nikos” assigned uaB+ (uaB plus) credit rating
"Credit-Rating", a nationally-recognized credit rating agency in Ukraine, has today announced the assignment of the uaB+ (uaB plus) long-term credit rating to the forthcoming issue of the registered zero-coupon (housing) bonds (E-O series) by the Cherkasy-based LLC "Nikos" ("Nikos", "the Issuer" or "the company") for the amount of UAH 6.6m due on 31 March 2008. The investment and construction is the main company`s activity. Today "Nikos" finances the construction of an office-trade centre and 2 residential houses in the city of Cherkasy. In the course of analysis, the "Credit-Rating" agency used Issuer`s 2002-2005 and 1H 2006 financial reports as well as other inside information furnished by the company.
The uaB issue rating reflects a HIGHER DEFAULT POSSIBILITY than of the uaBB rating, though in this case the obligor`s capacity is adequate to pay its obligations in the Ukrainian financial market environment. This debt liability is more affected by the adverse changes in business, financial and economic conditions than debt liabilities with higher ratings. That may negatively affect the obligor`s capacity and willingness to fully and timely pay interest and principal on obligations. "Plus" denotes rating`s relative status within major categories.
Factors supporting the credit rating
- The Issuer is the leading company of the the "Krug" group (which owns corporate rights of 31 entities). The main group`s activity is construction and production of construction materials. The group owns production facilities and structural divisions for supplying the construction on almost all stages.
- The funds obtained from the bonds` placement are to be aimed at construction of a residential house (with current readiness over 15%) in the city of Cherkasy.
- The UAH 30.77m own capital over 5x exceeds the planned bond issue size.
- The profitable Issuer`s activity over the past 3 years and 1H 2006, the size of the retained earnings is UAH 0.57m (as of 30 Jun. 2006)
Factors constraining the credit rating
- The Issuer does not have experience in residential construction and in bonds` redemption.
- Inconsistence on the issue of renting a land site for construction of a residential house in 19/1, Sumgaitskaya str. entailed by the peculiarities in the meeting schedule of Cherkasy City Council, which is in charge of land issues.
- Volatility in legislation and taxation on operations connected with construction and with attraction of funding.
Information on all the credit ratings assigned in accordance with the Ukrainian national scale may be found in the REUTERS and BLOOMBERG information systems.
For further information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
