OREANDA-NEWS  On 29 September Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it upgraded to uaBBB from uaBBB- (uaBBB minus) the long-term credit rating assigned to the city of Kramatorsk (`city`) and to registered coupon bonds (series 1-A) issued by its city council. The amount of the issue is UAH15m, with 2-year original maturity. To revise the rating Credit-Rating considered city`s social-economic and financial indicators for 1H2008, information on municipal property, city`s management system, as well as other inside information furnished by the city council.

An obligor or a debt liability with uaBBB credit rating is characterized with the SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is affected by adverse changes in commercial, financial and economic conditions. A plus "+" and a minus "-" signs indicate intermediary categories compared to the standard categories (grades).

Factors maintaining the credit rating

High fulfillment in January-June 2008 of the amended plan for revenues to the city budget`s general fund exclusive of transfers - 53.5% (including the plan on fixed revenues fulfilled by 53.3% and the plan by own revenues by 55.1%).

The city budget is not dependant upon loans from general treasury account.

The city council does not have direct debts as of Jul. 1, 2008, coupled with its moderate planned growth: in case the bond issue is placed in full, the city`s direct debt burden will account for 6.4% of the budget revenues approved for 2008 exclusive of transfers.

The retained positive trend of development of the city`s industrial sector in 1HHhHHHHh iojoijj  H2008 : the volume of industrial production sales has grown in the period analyzed by 55.5% to UAH3.1bn as compared to the similar year-earlier period, and, if calculated per capita, exceeded by 79.8% the country`s average indicator.

The city`s key social development indicators have improved in 1H2008: the monthly average salary grew by 20% to UAH1,909, which is 11.8% higher than the country`s average, coupled with a 4.1% rise in the number of employees.

Factors constraining the credit rating

High dependency of the city budget upon receipts from Novokramatorsk Machine-Building Plant CJSC (a. 38% of fulfilled volume of 1H2008 revenues to the city budget`s general fund exclusive of transfers).

The city`s dependency upon equalization grants from the State Budget, the ratio of which volume to the volume of the city budget`s general fund approved for 2008 exclusive of transfers is 3.9%.

High deterioration of City`s fixed assets, including the housing sector, utilities and transport infrastructure, which requires significant investments for their renovations, accompanied by high population`s arrears for utilities services.