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23.11.2006
The credit rating of the city of Odessa affirmed at uaBBB- (uaBBB minus)
"Credit-Rating", a nationally-recognized credit rating agency in Ukraine has today announced that it has affirmed the uaBBB- (uaBBB minus) long-term credit rating of the city of Odessa. The Outlook on the rating is Stable. In the course of the rating revision procedure, the agency took into consideration the city`s 1H 2006 economic and financial indicators as well as other information furnished by the executive committee of the city council.
The uaBBB issuer rating reflects ADEQUATE CAPACITY of an obligor to timely and in full pay a debt liability in the Ukrainian financial market environment, there is, though, a higher vulnerability to the effect of adverse changes in business, financial and economic conditions as compared to obligors with higher ratings. "Minus" denotes rating`s relative status within major categories.
Factors supporting the credit rating
- The positive tendencies of labour market development are being retained in 1H 2006 in comparison with 2005: the amount of employees (excluding small businesses) increased by 3.9%, the official level of unemployment is 0.3% being one of the lowest in Ukraine. The average salary grew by 17% and amounted to UAH 1006.7 as of 1 Jul. 2006 (the average of the country is UAH 967)
- Further 1H 2006 growth of a number of economic indicators, namely that of the goods turnover (137.6% as compared to the similar period of 2005) and of foreign investments (109.4% as compared to the 2006 year-beginning)
- Raise in effectiveness of city`s land and municipal property exploitation, in fact the incomes from land sites` fees grew 1.7x as compared to January - June 2005, and the 2006 annual plan for municipal community rental fees fulfilled by 118.9% in 1H 2006.
Factors constraining the credit rating
- A sufficiently high level of debt burden on the city`s budget.
- The growing expenditures over the decreasing revenues, being accounted in 2006 inter-budgetary transfers, which bring the city to the recipient-city category from that of donor-city`s.
- Decrease in industrial production by 32% over the period under study, in goods` and services` export by 12.8% in comparison with the similar period of 2005.
- The 1.6x growth in salary arrears (to UAH 11.1m) in 1H 2006, a such tendency if retained in the following period, may adversely effect the budget revenues.
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
