OREANDA-NEWS. December 04, 2009. Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it upgraded to uaBBB- (uaBBB minus) from uaBB the long-term credit rating assigned to registered coupon bonds (series A) issued by Kyiv-based Kyivmedpreparat OJSC (‘issuer’ or ‘company’). The amount of the issue is UAH30m, due Nov. 15, 2010. The outlook on the rating has been changed to stable from positive. The company’s primary business is production of pharmaceutical products and materials. To revise the rating Credit-Rating considered issuer’s financial statements for 1H2009 and its other inside information.

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).

Stable outlook indicates that there are no anticipated reasons to change the rating in the course of the year. This is outlook by default.

Factors maintaining the credit rating

Issuer’s scale of activity, in particular the company is one of the biggest national producers of pharmaceutical products represented in a wide mix, which allows for diversification of revenue sources.

The issuer’s net income from sales advanced by 46% for 9M2009 to UAH288.4m versus similar period in 2008.

Issuer’s high performance indicators recorded in the past 3 years and in 9M2009, with the EBITDA profitability being in excess of 20%).

Factors constraining the credit rating

The company has had negative experience in payments on its obligations of public issue of coupon bonds (series A).

Issuer’s debt burden: as of Sep. 30, 2009 the ratio of net debt to EBITDA calculated for the past 12 months was recorded at 3.3 (Credit-Rating anticipates that the issuer’s largest creditor will be loyal in terms of restructuring the issuer’s debts).

Dependency of the drug sector upon the state regulatory policy coupled with hot competition.

Company’s vulnerability to fluctuations in exchange rates, which is associated with high volumes of issuer’s export and import transactions.