OREANDA-NEWS. On 24 December 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned the long-term counterparty ratings to Kirovograd-based Kirovogradoblenergo OJSC at uaBBB and to Sevastopol-based Sevastopoloblenergo OJSC at uaBBB+ (uaBBB plus). Credit-Rating has also confirmed at uaBBB the long-term credit rating assigned to Kirovogradoblenergo`s UAH5m 10-year bonds (series A) and at uaBBB+ the long-term credit rating assigned to Sevastopoloblenergo`s UAH10m 10-year issue of registered coupon bonds. Credit-Rating has also downgraded to uaBBB from uaA- (uaA minus) the long-term credit rating assigned to Kirovogradoblenergo`s UAH120m 5-year issue of registered coupon bonds (series B) and to uaBBB+ (uaBBB plus) from uaA- (uaA minus) the long-term credit rating assigned to Sevastopoloblenergo`s UAH100m 5-year issue of registered coupon bonds (series B). The outlooks on the ratings are stable.

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).

The credit ratings of the companies` bond issues were downgraded to the level of the issuer`s ratings due to significant rise in the debt burden of the issues surety Hotel Premier Palace OJSC. The rise in the debt burden indicates its deteriorated solvency, and, in Credit-Rating`s view, significantly curbs the capacity of Hotel Premier Palace OJSC to meet its obligations in case the issuers are insolvent. Thus, Credit-Rating notes that the level of reliability of bonds issued by Kirovogradoblenergo OJSC (series B) and by Sevastopoloblenergo OJSC (series B) is exhibited with the creditworthiness of issuers only.

Factors maintaining the credit rating

The companies are natural monopolists in supply of electrical energy by the regulated tariff and in distribution of the energy to local networks.

Growth in issuers` profitability indicators recorded in 1H2008 and high level of customers` payments for the energy supplied.

Factors constraining the credit rating

Issuers` dependency upon state regulatory policy in the sector, namely upon the tariff policy of the National Electricity regulatory Commission of Ukraine.

Risks of redistribution of funds within the legally informal VS Energy group, which incorporate both issuers.