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30.01.2007
Bond issue by «Kievgorstroy-1» OJSC assigned uaBB+ (uaBB plus) credit rating
"Credit-Rating", a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaBB+ (uaBB plus) long-term credit rating to the issue of registered coupon bonds (of A series) by Kiev-based Trust "Kievgorstroy-1" named after M.P. Zagorodniy ("the Issuer" or "the company") for the amount of UAH 100m with the 7-year original maturity. The main company`s activity is residential and socio-cultural construction. In the course of analysis the agency used Issuer`s financial statements for 2001-2005 and 9M 2006 as well as other inside information furnished by the company.
The issues rated uaBB are the least affected by the risk of non-payment of the principal and interest within speculative grade. The obligor, however, may be impaired to timely and in full meet its commitments on the obligation in the Ukrainian financial market environment in the event of adverse changes in business, financial and economic conditions. However, the possibility of nonpayment is low in the near future. The "+" and "-" modifiers denote rating`s relative status within major categories.
Factors supporting the credit rating
- The Issuer is the leading construction company in the city of Kiev having operated since 1955, specifically the Issuer has constructed ca. 10.6m sq.m. of residential and socio-cultural premises.
- The Issuer owns production facilities and structural subdivisions for supplying the construction process on almost all stages and partially supply the process with own-made construction materials.
- The Issuer is involved in residential construction in the city of Kiev, where the real estate prices have been growing over the past 5 years.
- The Issuer`s own capital 36.4% exceeds the issue size of UAH 100m (as of 30 Sep. 2006)
Factors constraining the credit rating
- Unstable Issuer`s financial and economic performance indicators over 2001- 9M 2006; its detrimental activity according to 2003 and 9M 2006 totals, the uncovered loss amounted to UAH (-) 3.6m as of 30 Sep. 2006.
- Dependency of Issuer`s performance indicators on size of construction projects and on order portfolio, which are restrained by number of land sites allotted to construction in Kiev as well as by growing competition.
- Low liquidity indicators and negative net working capital of UAH (-) 46.6m as of 30 Sep. 2006 entailed by 3x increase in arrears on short-term credits in the current year, which have been partially used for funding the long-term assets.
- Low level of company`s information transparency.
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
