OREANDA-NEWS. On 14 May 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned a long-term credit rating of uaB to unregistered discount bonds (series B) to be issued by Ternopil-based TF Budivelnyk PV (`issuer` or `company`). The amount of the issue is UAH110m, with 5-year original maturity. The company`s principal activity is investing and construction. Today the company constructs 8 residential buildings located in the city of Ternopil. In the course of analysis Credit-Rating considered issuer`s financial statements for 2002-2007 as well as its other inside information.

An obligor or a debt liability with uaB credit rating is characterized with the LOW creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is extremely susceptible to adverse changes in commercial, financial and economic conditions.

Factors maintaining the credit rating

The issuer has experience in residential construction conducted in the city of Ternopil, in fact, starting from 1998 the issuer as a customer and a general contractor has built 8 residential houses of 45.9K sq.m. total floor area, with more 5 buildings of 9.2K sq.m. being on the stage of delivery.

The issuer enjoys availability of order portfolio scheduled through 2012: 10 residential buildings of 92.6K sq.m. are to be built (with 2 houses of 15K sq.m. by affiliated party), as well as a number of projects on reconstruction and general contractor services to be rendered in this period.

The issuer owns production facilities and structural subdivisions, which empower the construction process to be supplied on almost all stages.

The issuer operates on the construction market of Ternopil, where demand has been constantly growing over the past few years.

Factors constraining the credit rating

The amount of the bond issue of UAH110m exceeds more than 8x issuer`s equity of UAH13.5m as of Dec. 31, 2007 and almost 2x the issuer`s consolidated net earnings of UAH56.8m for the past 5 years.

The company has no financial plan for the period of bonds` maturity.
Instability in legislation and tax environment controlling both the construction industry and project financing.