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21.12.2006
Bond issue by “Direction of Office Buildings” LLC assigned uaB credit rating
“Credit-Rating”, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaB long-term credit rating to the issue of registered zero-coupon (housing) bonds (of C series) to Donetsk-based “Direction of Office Buildings” LLC (“the Issuer” or “the company”) for the amount of UAH 43.4m with the 5-year original maturity. 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.
Factors supporting the credit rating
- Issuer’s experience in investment and construction projects’ implementation, specifically the company as a customer set in operation a 1.5 thousand sq.m. office building in the city of Donetsk.
- 2 office buildings of 12.4 thousand sq.m. are to be set in operation by
end-2006 – beginning-2007. - Issuer is involved in construction financing in the city of Donetsk, where the real estate prices have been growing over the past few years.
Factors constraining the credit rating
- Construction of the building to be financed by the funds obtained form the bonds’ placement is currently on the initial stage.
- Issuer’s own capital amounted to UAH (-)2.6m as of 30 Jun. 2006
- A sue filed against Issuer may hamper the planned for 4Q 2006 setting in operation the object (bonds of B series).
- 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
