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18.12.2006
Bond issue by “Construction company “Citadel” assigned uaB- (uaB minus) credit rating
Kiev (Credit-Rating) 15 December 2006. “Credit-Rating”, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaB- (uaB minus) long-term credit rating to the issue of zero-coupon (housing) bonds (of A-E series) by Kiev-based “Construction company “Citadel” LLC (“the Issuer” or “the company”) for the amount of UAH 178.8m with the 1 ½ - year original maturity. The main company’s activity is construction and investment. Today the company as a customer constructs a residential complex in Kiev satellite town of Borispil. In the course of analysis the “Credit-Rating” agency used Issuer’s 2005 and 1H 2006 financial reports as well as other inside information furnished by the company.
The uaB issue rating denotes 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. The “+” and “-“ modifiers denote rating’s relative status within major.
Factors supporting the credit rating
- The Issuer implements the investment and construction project being funded by 8% as of 1 Oct. 2006.
- The Issuer constructs residential houses in the borough of Borispil, where growth of real estate demand is in line with that in Kiev.
Factors constraining the credit rating
- The Issuer does not have experience in implementation of investment and construction projects, and in bonds’ redemption.
- Risks incurred by the project’s size, specifically the total floor area of the complex to be financed at the expense of the bonds’ placement is 56.0 thousand sq.m.
- The construction to be financed by the funds obtained from the bonds’ placement is currently on the initial stage.
- 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 also 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
