OREANDA-NEWS. On 20 May 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned a long-term credit rating of uaBB to registered coupon bonds (series B) to be issued by Ivano-Frankivsk-based TS Favorit LLC (`issuer` or `company`). The amount of the issue is UAH200m, with 5-year original maturity. The company`s principal activity is retail trade via the same-name outlet chain. In the course of analysis Credit-Rating considered issuer`s financial statements for 2002-2007 as well as its other inside information.

An obligor or a debt liability with uaBB credit rating is characterized with the LOWER THAN SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is strongly 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).

Factors maintaining the credit rating

The issuer`s net sales via Favorit outlet chain added 70.9% having advanced to UAH105.9m in 2007.
The Favorit outlet chain has leading positions in the region`s retail market.
The retail segment has been rapidly growing over the past few years; this trend is expected to be further retained.

Factors constraining the credit rating

Issuer`s detrimental operating performance in 2005-2007.
Growth of issuer`s debt burden: 2007 saw 2.3x (to UAH345.9m) increase in issuer`s debt obligations.
Issuer`s ambitious expansion plans: the issuer is planning to increase the number of its outlets to 500 by 2010.
Expected rise in competition from the side of national retail chains.