OREANDA-NEWS. December 17, 2007. Credit-Rating, a nationally recognized credit rating agency in Ukraine today upgraded to uaAA from uaA the long-term credit rating assigned to the city of Donetsk, the agency's press service reported. The agency has also upgraded to uaAA from uaA the long-term credit rating assigned to City's UAH50m 5-year registered coupon bonds (C series). The outlook on both ratings is stable. In the course of the rating`s revision procedure Credit-Rating considered City's key social-economic and financial figures for 2004-2006 and 9M2007 as well as other inside information furnished by the city council.

An obligor or a debt liability with uaAA credit rating is characterized with the VERY STRONG creditworthiness as compared to other Ukrainian obligors or debt liabilities. "Stable" outlook indicates that there are no anticipated reasons to change the rating in the course of the year.

Factors maintaining the credit rating:

High growth rates of budget revenues excl. transfers persisted in January-September 2007 (153.1 per cent as compared to the similar year-earlier period). High liquidity of the City budget`s general fund, specifically as of Oct.1, 2007  the rest of the budgetary funds, including those deposited, account for 13.2 per cent of the City budget expenditures in January-September 2007. High level of implementation of the annual budget plan on incomes excl. transfers in 9M2007, namely 81.9 per cent on the general fund and 95.1 per cent on special-purpose plan.

Growth in City"s key figures in January-September 2007, specifically the industrial production sales grew 30.2 per cent to UAH14.6bn, investments in fixed capital rose 15% to UAH3.5bn, and the retail turnover increased 36.7% to UAH5.4bn. As calculated per capita these indicators exceed those national averages 1.6x, 1.6x and 2.1x respectively. The City's key social development figures improved in January-September 2007, namely the number of employees (excluding small businesses) increased 2.6 per cent to 348.6K, which accounts for 34.9 per cent of the City`s overall population; 24.6 per cent growth in monthly average salary to UAH1,587, which 1.2x exceeds the national average indicator accompanied by low unemployment rate. Low level of the City's direct debt as of Oct. 1, 2007 with the direct debt burden accounting for 7.3 per cent of City`s 2007 budget amended incomes excl. transfers.

Factors constraining the credit rating:

High deterioration of City's main funds, including the housing sector, utilities and transport infrastructure, which requires significant investments for their renovation.