OREANDA-NEWS. December 27, 2007. Credit-Rating, a nationally recognized credit rating agency in Ukraine, has today assigned a long-term credit rating of uaBBB- (uaBBB minus) to the city of Kramatorsk, the press service of agency reported. The agency has also assigned a long-term credit rating of uaBBB- (uaBBB minus) to City's upcoming issue of coupon bonds (1-A series). The issue size is UAH15m with the original maturity of 5 years. The outlook on both ratings is Stable. In the course of analysis Credit-Rating considered City's social-economic and financial indicators for 2002-2006 and 9M2007, 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. The plus (+) or minus (-) modifier denotes rating`s relative status within major categories.

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 City's key social development indicators have improved in 2002-2006 and 9M2007, specifically the average monthly wage rose 3x to UAH1,508, which exceeds 17.1 per cent the national average, accompanied by decline in unemployment to 2 per cent, which is 0.1 p.p. lower than the national average.

The City's industrial complex has developed stably over 2002-2006 and 9M2007, in fact the per capita industrial production sales have exceeded annually the national average figures, namely by 61 per cent in January-September 2007.

High growth rates of budget revenues derived in 2006, hence the volume of budget gains planned by the Ministry of Finance have been overfulfilled by 10.2 per cent with the approved and amended volume of fixed incomes for 2007 exceeding 12.9 per cent the indicators estimated by the Ministry of Finance (the annual plan on fixed incomes has been fulfilled by 79.2 per cent for January-September 2007).

The City enjoys absence of direct debts (as of Oct. 1, 2007) coupled with its moderate planned growth.


Factors constraining the credit rating:

The City's dependency upon transfers from the State budget, namely on leveling subsidies, which specific gravity made up 2.6 per cent of the budget revenues approved for 2007 with such trend expected to be retained.

High dependency of the City budget upon gains from Novokramatorsk Machine-Building Factory CJSC (about 38 per cent of the budget revenues derived in 9M2007).

Certain indicators of the City's economic development are lower than the national averages, in fact the fixed-capital investments are 33.2 per cent lower (in 1H2007) and the retail trade is 33.7 per cent lower (in 2006).

High deterioration of the 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.

The size of the City's property is limited, which will have negative impact on gains in development budget. High age rate of City`s population (115 per cent as of Jan. 1, 2007), which witnesses excessive population's aging. This tendency, if retained, may lead to decrease in budget revenues derived from individuals tax, which specific gravity in the budget general fund excl. transfers accounts for over 80 per cent.