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23.01.2007
Bond issue by «Korvet-Avto» 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 A and B series) by Lviv-based "Korvet-Avto" LLC ("the Issuer" or "the company") for the amount of UAH 12.75m with the 4-year original maturity. The main company`s activity is investment and construction. Today the company constructs 2 residential houses in the city of Lviv. In the course of analysis "Credit-Rating" agency used Issuer`s financial statements for 2001-2005 and for 9 months 2006 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
- The commercial and manufacturing private firm "Budextra" is the only Issuer`s participant and general contractor, which has experience in residential construction (having built ca. 6.3k sq.m.)
- Funds obtained from the bonds` placement will be aimed at construction of two residential buildings in the city of Lviv (with projected floor space of 4,961.62 sq.m.). The construction readiness of the buildings is 30% and 5% respectively.
- Issuer constructs residential premises in the city of Lviv, where the real estate prices have been growing over the past 5 years.
Factors constraining the credit rating
- Issuer does not have experience in investment and construction projects and in redemption of zero-coupon (housing) bonds.
- The Issuer as of 30 Sep. 2006 was not involved in financial and economic activity. The issue size almost 22x exceeds Issuer`s asset balance.
- 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
