OREANDA-NEWS. January 25, 2010. Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it downgraded to uaCCC from uaB the long-term credit rating assigned to registered housing bonds (series A-S) issued by Chernivtsi-based Developing and Construction Firm Rika LLC (‘issuer’ or ‘company’). The amount of the issue is UAH75.15m. The outlook on the rating is stable. The company’s principal activity is production and sale of concrete, and investing and construction. Today the company implements construction and renovation projects in the city of Chernivtsi. To revise the rating Credit-Rating considered issuer’s financial statements for 3Q and 9M2009 and its other inside information.

An obligor or a debt liability with uaCCC credit rating is characterized with the VERY LOW creditworthiness as compared to other Ukrainian obligors or debt liabilities. There is a default possibility.

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

Factors maintaining the credit rating

The issuer has experience of a general contractor in construction of 2 residential buildings of 6.6K sq.m. total floor area.

The amount of funds invested in the project located 219, Russkaya Str., Chernivtsi (UAH58m as at Sep. 30, 2009), which premises to redeem the bonds of series A-S.

Factors constraining the credit rating

Low pace of construction of the mentioned residential complex, which, as expected, may result in late redemption of bonds of series A-S.

A part of the residential complex (buildings #5 and #6) is pledged as security for a bank loan.

Issuer’s unstable performance indicators recorded in the past few years.

The issuer does not have experience in implementation of investment and construction projects, neither in redemption of housing bonds.

Ongoing negative trends in Ukraine’s real estate sector.

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