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16.05.2007
City of Vinnitsa assigned uaBBB- credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaBBB- (uaBBB minus) long-term credit rating to both the city of Vinnitsa (`City`) and its bond issue for the amount of UAH 15m with the 3 1/2-year original maturity. The agency has also upgraded to uaBBB- (uaBBB minus) from uaBB+ (uaBB plus) the long-term credit rating assigned to City`s bond issue for the amount of UAH 20m with the 3-year original maturity. Outlooks on all ratings are Stable. In the course of analysis the agency considered City`s 2002-2006 financial and economic indicators as well as other inside information furnished by the city council.
The uaBBB issuer rating reflects City`s 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 rating`s 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
- 2006 significant growth of 41.9% compared to 2005 in budget revenues excluding transfers, mainly due to significant increase in budget gains from natural persons` tax and from land fee.
- Decreased budget dependency upon transfers from higher levels` budgets, specifically the 2007 planned leveling donations from the State budget have been almost 2x decreased as compared to the prior budget period.
- Enhanced key figures of City`s social development during 2006 compared to 2005, in fact the lowered rates of registered unemployment to 1.7%, being 1.6x lower than that country`s figures in line with the increased number of employees and their wages.
- Growth of City`s social development indicators during 2002-2006, specifically the heightened sales of industrial production, the volume of attracted investments into fixed capital, volume of external goods` turnover, volume of retail turnover, volume of direct foreign investments, volume of residential construction, though some 2006 per capita indicators are lower than those average in Ukraine.
- Low City`s direct debt as of Jan. 1, 2007 entailed by its modest 2007 planned growth, specifically city`s budget direct debt in 2007 is to amount to 11.2%.
Factors constraining the credit rating
- City`s dependency upon official transfers from the State budget, specifically the leveling donations, which specific gravity in City`s 2006 budget revenues amounted to 11.3%.
- The 2006 weighted average salary is 10.1% lower than that average of the country.
- High deterioration of main funds, including utility facilities, and necessity in capital investments into renovation of city`s utility infrastructure.
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
