OREANDA-NEWS. On 04 July 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it upgraded to uaA from uaA- (uaA minus) the long-term credit rating assigned to the city of Odessa (`city`). The outlook on the rating is stable. To revise the rating Credit-Rating considered city`s social-economic and financial indicators for 2005-2007 as well as other inside information furnished by the city council.

An obligor or a debt liability with uaA credit rating is characterized with the HIGH STRONG creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is susceptible to adverse changes in commercial, financial and economic conditions.

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 high growth rates of revenues to the general fund of the city budget exclusive of transfers retained, specifically the volume of receipts in 2007 exceeded 54% that of the previous budget period (43.2% in 2006).

Further growth of a majority of city`s figures in 2007: the fixed capital investments increased by 25.3% (in comparative prices) to UAH5.5bn, the export goods turnover grew by 19.4% to USD3bn, the homes delivered rose by 5% to 472.2K sq.m. (these indicators calculated per capita exceed the national averages).

The positive development trend of city`s labour market retained in 2007: the number of employees rose by 3.6% to 282.9K accompanied by low registered unemployment of 0.3%, which is much lower than the national average of 2.4%.

Highly efficient utilization of municipal property and land at disposal of territorial community of the city council: in the past 2 years the growth rates of payments for land have been 120-130%, and of fees obtained from leasing of communal property 114-150%, accompanied by vigorous filling the budget with funds obtained from alternative sources.

Factors constraining the credit rating

The city`s direct debt on the budget revenues is expected to increase to 25.4% in 2008, provided that the planned loan of UAH300m is raised, albeit the ratio of direct debt burden to the budget revenues exclusive of transfers is on adequate level of 22.4% as at Jan.1, 2008.

The growth rates of the budget revenues are expected to decrease in 2008, accompanied by persisted growth of the current expenditures.

High deterioration of city`s utilities, transport and housing sectors, which require significant investments for their renovation.