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28.11.2006
The credit rating assigned to the bonds issued by the city of Vinnitsa upgraded to uaBB+ (uaBB plus)
"Credit-Rating", a nationally-recognized credit rating agency in Ukraine, has today announced the upgrade from uaBB to uaBB+ (uaBB plus) long-term credit rating assigned to the bonds issued by the city of Vinnitsa for the amount of 20m with the 3-year original maturity. The Outlook is Stable . In the course of the rating upgrade procedure the "Credit-Rating" agency took into consideration the 1H 2006 city`s economic and financial indicators as well as other inside information furnished by executive committee of the city council.
The uaBB issue rating reflects that these obligations are the LEAST AFFECTED BY THE RISK OF NONPAYMENT of the principal and interest within the speculative grade. The obligor, however, may be impaired to timely and in full meet its commitments on the obligation in the Ukrainian financial market environment in the event of adverse changes in business, financial and economic conditions. However, the possibility of nonpayment is low in the near future. "Plus" denotes rating`s relative status within major categories.
Factors supporting the credit rating
- A sufficient growth in 1H 2006 city`s budget revenues as compared to the similar period of 2005 due to a significant increase in incomes from the individuals taxation and ground rent.
- Effective performance of local administration resulting in expansion of individuals` taxation. That entailed the 55% raise in budget revenues from the individuals` taxation in 2006 (compared to 2005) with the wages planned growth being 30% (the 1H 2006 revenues growth was 60.6% to the 1H 2005 actual fulfillment).
- Growth in main economic indicators in 1H 2006 as compared to 1H 2005, in fact the sales of industrial products increased by 24%, the size of investments into fixed capital raised 1.5x, the size of foreign trade turnover grew 1.5x.
- Improvement in main indicators in 1H 2006 city`s social development, decrease in registered unemployment from 1.8% to 1.7% which is twice less than that average of the country, increase in number of employees in all industries, growth in wages.
- Decrease in current arrears for housing payments with the simultaneous increase in tariffs to the level sufficient to cover the housing service net cost.
Factors constraining the credit rating
- The city`s budget dependency on transfers from higher level budgets, namely the specific weight of this source in 1H 2006 budget revenues amounted to 34.8% (with 38.5% being in 2005)
- Some 1H 2006 per capita indicators of social and economic development are less than that of the country`s average i.e. the sales of industrial products 2.9x, the size of direct foreign investments 4.5x, the investments into fixed capital is less by 38.7%, the size of foreign trade turnover by 39.7%.
- Low level of average wages (12.3% lower than that average of the country) with the wages arrears growth by 31.5% (to UAH 5.5m) in 1H 2006.
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
