OREANDA-NEWS. On 24 February 2009 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it downgraded to uaB from uaBB the long-term credit ratings assigned to registered housing bonds (series A and series B) issued by Dnepropetrovsk-based K and FD LLC (issuer or company). The amount of the issues is UAH25m and UAH72.5m (respectively to the series stated) due March 5, 2016 and June 29, 2010. The company's principal activity is investing and construction. Today the company constructs the 1 st phase of a multifunctional residential complex and reconstructs a block of buildings located in the city of Dnepropetrovsk. To revise the rating, Credit-Rating considered issuers financial statements for 4Q and full 2008 and 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 and the group, which incorporates the issuer, have necessary experience in implementation of investment and construction projects.

Factors constraining the credit rating

The proprietary rights for a part of residential and non-residential premises in the 1st phase of the multifunctional residential complex located near Khersonskaya Str. - Schorsa Str. - Ushinskogo Str. - Pushkin Av. in the Dnepropetrovsk's centre, which is to be financed with the funds raised from series B bonds, are pledged as security for a bank loan.

Possible complications with funding the project under adverse environment in the financial market and low demand for real estate in the primary market.

The meeting of issuers commitments on the upcoming issue of series B bonds (due Dec. 28, 2010) is contingent upon timely commissioning the residential complex, which is scheduled for end-3Q2010.

The issuer does not have experience in redemption of housing bonds.

Ongoing negative trends in Ukraines real estate sector.

Instability in legislation and tax environment controlling both the construction industry and project financing.