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11.05.2007
The city of Lutsk assigned uaBBB+ credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaBBB+ (uaBBB plus) to the city of Lutsk. Outlook on the rating is Stable. To assign the rating Credit-Rating used citys financial and economic indicators for 2002-2006 as well as other inside information furnished by the city council.
The uaBBB issue rating reflects citys adequate capacity to timely and in full meet its commitments on the obligations in the Ukrainian financial market environment. There is, though, a higher vulnerability to the effect of adverse changes in business, financial and economic conditions as compared to obligors with higher ratings. The + and - modifiers denote ratings relative status within major categories.
Stable Outlook denotes that there are no anticipated reasons to change rating in the course of the year.
Factors maintaining the credit rating
- Growth in citys key indicators for financial and economic development during 2002-2006, which 2006 per capita indicator exceeds that average of Ukraine, specifically rates of sale and industrial production, volume of investments into fixed capital, volume of foreign direct investments, volume of retail turnover.
- Positive dynamics of citys indicators of social development during 2002-2006, in fact rise in natural growth of population, rise in number of employees in line with the decline in level of unemployment.
- Growth in budget revenues resulting in 28.6% decrease in state subsidies as compared to those of 2006.
- The city does not have a direct debt as of Jan. 1, 2007, with the planned level of its growth being modest in 2007.
Factors constraining the credit rating
- Citys dependency upon transfers from the state budget, specifically the maintaining subsidies, which specific gravity in citys Jan.-Sep. 2006 budget revenues amounted to 19.4%.
- The average salary is 11.1% lower than that average of Ukraine according to January-November 2006 totals.
- High concentration of production sales on 2 companies Lutsk Automobile Plant OJSC and SKF Ukraine OJSC.
- High level of deterioration of main funds, including utility facilities, and necessity in capital investments into citys infrastructure (roads, lights, roofs etc.)
Information on all the credit ratings assigned in accordance with the Ukrainian national scale may be found in the REUTERS, BLOOMBERG and FTN MONITOR information systems.
For further information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
