OREANDA-NEWS. On 08 August 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine, assigned a long-term credit rating of uaBB+ (provisional) to UAH38.2m upcoming registered housing bonds (A-J series) with original maturity till December 19, 2010 to be issued by Sumy-based Ukrrosmetal CJSC (`Issuer` or `Company`). The company`s principal activity is investing and construction. Today the company carries out 5 reconstruction and construction projects in the cities of Sumy and Poltava. In the course of analysis Credit-Rating considered Issuer`s financial statements for 2005-2007 and 1H2008 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 has experience in construction activities: over 2004-2007 and 1H2008 the Issue as a general contractor has constructed and reconstructed 11 residential and non-residential objects (including 3 objects were constructed as a customer) with total area of 31.5K square meters;

The upcoming housing bond issue is guaranteed by the Issuer`s participant Ukrtekhnosintez, the net sales of which, according to the results of 2006 and 2007, amounted to UAH202.6m and UAH264.5m respectively, EBITDA profitability was 10.1% and 11.3% respectively, retained earnings amounted to UAH110.4m as of March 31, 2008;

The Issuer owns the branched structure, which empower it to supply the construction process on almost all stages.

Factors constraining the credit rating:

Issuer has no experience in bonds redemption by giving appropriate premises to their owners;

Issuer has no experience in putting into operation the construction objects on a tight timetable which are similar to the object which premises will be used to redeem the upcoming housing bonds issue;

Increase in the ratio between net debt and EBITDA of the guarantor from 0.11 to 3.03 times over 2007 and 1Q2008;

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