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26.12.2006
Credit ratings assigned to the city of Kharkiv affirmed
"Credit-Rating", a nationally-recognized credit rating agency in Ukraine has today affirmed the uaA credit rating assigned to the city of Kharkiv, and the uaA+ (uaA plus) credit rating assigned to city`s bond issue for the amount of UAH 100m with the 3-year original maturity. Outlooks on both ratings are Stable . To revise the ratings the "Credit-Rating" agency used city`s 1H 2006 financial reports as well as other inside information furnished by the city council.
The uaA rating reflects strong capacity of an obligor to pay the debt liability given, it may, though, be vulnerable to adverse changes in economic, financial and business conditions than debt liabilities rated uaAA and uaAAA. The "+" and "-" modifiers denote rating`s relative status within major categories. Stable Outlook shows that there are no conditions to change rating in the course of the year.
Factors supporting the credit rating
- Growth in city`s major economic development indicators over January-June 2006 as compared with the similar period of 2005, specifically the volume of industrial production sales grew by 9.6%, of investments into fixed capital grew by 14.1% (this indicator calculated per capita exceeds by 42.6% the correspondent weighted average country`s indicator), the volume of direct foreign investments grew by 84.3% (this indicator calculated per capita exceeds by 18.6% the correspondent weighted average country`s indicator), the volume of export turnover grew by 11.4%
- Ordering of small retailers` outlets and 57.4% growth in retail turnover (up to UAH 3.5bn), which is over 2x exceeds the country`s weighted average indicator.
- Retention of positive tendencies in labour market development over 1H 2006, as compared to 2005, specifically, the level of registered unemployment decreased by 0.1 percentage points (to 0.73%), which is 4.6x less than country`s registered unemployment level, growth in number of employees and in wages.
Factors constraining the credit rating
- Growing dependency of the consolidated city budget on attraction of short-term loans for covering temporary cash spreads, specifically the 1H 2006 saw UAH 213.5m attracted by city districts` budget, which is 46.7% of general budget revenues excluding transfers.
- The level of wages is 1.6% less than that average of the country, with wage arrears almost 2x growing over 1H 2006 (up to UAH 18m).
- A number of city`s per capita economic development indicators according to 1H 2006 totals is lower than that average of the country, specifically the industrial production sales by 7.8%, export turnover by 37.5%, and volume of residential premises set in operation is 3x lower.
- A significant size of population`s overdue arrears for communal services and 10.4% growth in this indicator over 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
