OREANDA-NEWS. On 17 July 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine has announced that it assigned a long-term credit rating of uaBB carrying stable outlook to Rubizhne city council`s upcoming issue of registered coupon bonds. The amount of the issue is UAH10m, with 5-year original maturity. In the course of analysis Credit-Rating considered city`s key social-economic and financial indicators for 2003-2007 as well as other information furnished by the city council.

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.

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

Factors maintaining the credit rating

High growth rates of budget revenues of the city budget`s general fund exclusive of transfers over the past 3 years, specifically the revenues exceeded by 57.3% in 2005, by 16.6% in 2006 and by 39.5% in 2007 the relevant indicators in corresponding previous budget periods.

The city budget was not dependant upon borrowings from the Treasury general account during 2005-2007.

Significant experience of the city mayor and high consolidation of the city authorities, which contributes to successful implementation of the city`s strategic development plan.

Factors constraining the credit rating

The retained dependency of the city budget upon grants from the State budget, which ratio to the revenues of the city budget`s general fund exclusive of transfers made up 52.6% in 2007.

A limited number of large items of communal property, which may possibly be sold, with further contribution the raised funds to the city`s development budget.

High dependency of the city budget upon gains from two companies Zarya RKHZ and Rubezhanskyi Cardboard Combine (from both of which a. 50% of the city budget`s general fund exclusive of transfers is contributed).

The monthly average salary in the city is 11.9% lower than that of the country (as at 2007), accompanied by dependency of the city budget revenues upon receipts from the individuals` tax: the specific gravity of this source in the revenues of the city budget`s general fund exclusive of transfers accounted for a. 70%.

Certain indicators of the city`s social-economic development of 2007 are lower than the country`s average, i.e. the fixed capital investments 2.5x (calculated per capita), homes delivered 7.6x (calculated per 1000 inhabitants), foreign direct investments 7.8x (per capita), retail turnover of goods 2.6x (per capita), and the registered unemployment rate is 1.8x higher than the country`s average.

High deterioration of city`s utilities, transport and housing sectors, which require significant investments for their renovation, coupled with high population`s arrears for utilities services.