OREANDA-NEWS. On 19 May 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned a long-term credit rating of uaAA to unregistered coupon bonds (series D) to be issued by Donetsk city council (`city`). The amount of the issue is UAH80m, due in 2013. In the course of analysis Credit-Rating considered city`s social-economic and financial indicators for 2003-2007 as well as its other inside information.

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.

Factors maintaining the credit rating

High growth rates of budget incomes exclusive of transfers, specifically in the past 3 years the budget incomes exceeded 43.4%, 24.8%, 52.8% in 2005, 2006 and 2007 respectively the figures of the previous periods.
Low city`s direct debt burden as of Jan.1, 2008 (6.2% of the budget`s incomes exclusive of transfers) with its modest anticipated growth: in case the bond issue is placed in full, the debt burden will account for 10% of the planned for 2008 budget incomes excluding transfers.

High liquidity of the city budget`s general fund: as of Jan. 1, 2008 the left-over of budgetary funds including the deposited funds, account for 9.5% of the budget`s general fund expenditures for 2007.

Rise in city`s key economic development indicators in 2003-2007: the industrial production sales advanced 1.6x to UAH20.5bn, the retail goods turnover rose 6.3x to UAH7.9bn, the fixed capital investments grew 1.9x to UAH3.5bn (for 9M2007). These indicators calculated per capita exceed the national averages of 1.6x, 2.1x, 1.6x respectively.

Growth in city`s social development indicators in 2003-2007: the average wage grew 3x to UAH1,665.4, which is 23.3 than the country`s average accompanied by a 9.5% rise in number of employees (exclusive of small businesses) in 2004-2007 to 349.3K, which makes up 35% of the overall city`s population.

Factors constraining the credit rating

High deterioration of city`s fixed assets, including the housing sector, utilities and transport infrastructure which requires significant investments for their renovations, coupled with high population`s per capita arrears for utilities services.