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21.02.2007
Upcoming bond issue by «Rika» LLC assigned uaB credit rating
"Credit-Rating", a nationally-recognized credit rating in Ukraine has today announced the assignment of the uaB long-term credit rating to the upcoming issue of registered housing bonds (A-S series) by Chernivtsi-based Engineering and Construction company "Rika" LLC ("the Issuer" or "the company") for the amount of UAH 75.15m due on 25 Oct. 2011. The main company`s activity is production and sale of central-mixed concrete, as well as investment and construction. Today the company constructs the "Formarket" covered market and reconstructs a children`s hospital in Chernivtsi. In the course of analysis the "Credit-Rating" agency used Issuer`s financial statements for 2001-2005 and 9M2006 as well as other inside information furnished by the company.
The uaB issue rating reflects 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 maintaining the credit rating
- The Issuer has experience of general contractor in construction of 2 residential buildings of 6.6K sq.m.
- Growth rates of construction market in Chernivtsi are in line with the all-Ukrainian tendency of growth in investment and construction business.
Factors constraining the credit rating
- The Issuer does not have experience of customer and investor in residential construction, neither in bonds` redemption.
- The bond issue is to be redeemed by residential premises in the building (219, Russkaya str., Chernivtsi) being currently on initial stage of construction.
- Risks incurred under the project`s size, specifically the total floor area of the object to be redeemed by the bond issue is 27.44K sq.m.
- The planned issue size of UAH 75.15m 8x exceeds the Issuer`s asset balance of
UAH 9.06m; the equity is negative (UAH(-)0.31m) as of 30 Sep. 2006. - 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
