OREANDA-NEWS  On 19 December Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it affirmed at uaAA- (uaAA minus) the long-term credit rating assigned to the city of Zaporizhzhia (`city`). The rating outlook has been changed to negative. The agency has also affirmed at uaAA- (uaAA minus) the long-term credit rating assigned to city`s bonds (series F-H) for the amount of UAH60m due in 2012 and UAH75m due in 2010 (series B-E). The outlooks on F-H series bonds have been changed to negative and on B-E series bonds to stable.

An obligor or a debt liability with uaAA credit rating is characterized with the VERY STRONG creditworthiness as compared to other Ukrainian obligors or debt liabilities. A plus "+" and a minus "-" signs indicate intermediary categories compared to the standard categories (grades).

Negative outlook indicates that there is a possibility to downgrade the city`s rating and the rating assigned to F-H series bonds, due to decreased city`s wage fund, decline in performance of industrial companies operating in the city, which was prompted by crisis in the national economy and continuing negative environment in domestic and overseas markets.

The retention of stable outlook on series B-E bonds is explained with high city budget`s liquidity in the short term prospective and low ratio of expenses for servicing and repayment of obligations to the city budget revenues.

Factors maintaining the credit rating

Retention of high pace of growth of city budget revenues and increased indicators of budget`s liquidity.

Further growth of city`s key figures recorded during 1HHH2008, the majority of which calculated per capita is in excess of the country`s averages.

Retention of positive trend in city`s key social development indicators in 1H2008.

Low city budget`s direct debt burden.

Factors constraining the credit rating

The expected decline in growth rates of city budget revenues in 2009 due to crisis in Ukraine`s economy, specifically in machine building and metallurgy sectors, where operate the biggest tax payers for the city budget.

High deterioration of city`s fixed assets, including the housing sector, utilities and transport infrastructure, which requires significant investments for their renovation. Thereat the significant experience of the city mayor and management team, as well as high consolidation of city`s authorities are to contribute to quick respond to crisis challenges in city`s economy.