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22.12.2006
Upcoming issue by «Yaytse-Raytse» PE 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 registered coupon bonds (of A series) assigned to Ternopil oblast-based "Yaytse-Raytse" Private Enterprise (the Issuer or the company) for the amount of UAH 5m with the 3-year original maturity. The main company`s activities are production, processing and selling of poultry products. In the course of analysis "Credit-Rating" used Issuer`s 2004-2005 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
- Growth in issuer`s financial and economic indicators over 2004 1H 2006, specifically the growth in net sales from UAH 0.47m to 0.86m, in assets from UAH 0.5m to 4.9m, in own capital from UAH 0.018m to 2.79m. Net profit increased from UAH 0.038m to 0.076m in 1H 2006.
- Egg and poultry market growth over the past few years and further growth foreseen by experts.
Factors constraining the credit rating
- The issue size over 2.7x exceeds Issuer`s total sales volume for its overall period of operation and is comparable with the assets volume as of 30 Jun. 2006.
- Probability of bonds` redemption is dependant upon Issuer`s successful implementation of its ambitious strategy, which plans 10x growth in net sales.
- Negative working capital, making Issuer be dependant on debt capital, all Issuer`s property is pawned by bank credits.
- Big market operators, Issuer`s competitors, having more developed production facilities with big potential, created large industrial groups and have already achieved almost closed production cycle, and also have significant experience in poultry and food business.
- Company`s dependency on state regulation in agricultural industry.
Information on all the credit ratings assigned in accordance with the Ukrainian national scale can 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
