OREANDA-NEWS. On 29 December 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it downgraded to uaCCC from uaB the long-term credit rating assigned to registered housing bonds (series I-P) issued by Kyiv-based Gradostroy LLC (`issuer` or `company`). The amount of the issue is UAH23.5m due Dec. 22, 2008. The company`s principal activity is investing and construction. Today the company implements a number of construction projects located in the cities of Kyiv, Chernihiv, and in the borough of Mikhailovka-Rubezhovka (Kyiv Oblast). To revise the rating Credit-Rating considered issuer`s financial statements for 3Q and 9M2008 and its other inside information.

An obligor or a debt liability with uaCCC credit rating is characterized with the VERY LOW creditworthiness as compared to other Ukrainian obligors or debt liabilities. There is a default possibility.

Factors maintaining the credit rating

The issuer has experience in residential construction; in fact the issuer has commissioned residential buildings of 42.4K sq.m. floor area.

Adequate volume of works conducted at construction of the residential building located 9б, Kirova Str., borough of Mikhailovka-Rubezhovka (Kyiv Oblast), which premises are to redeem the bonds of series I-P.

Factors constraining the credit rating

The issuer does not have experience in redemption of housing bonds.

Issuer`s negative equity of UAH7.3m as of Sep. 30, 2008, which was prompted by issuer`s detrimental performance in 2005-2007 and 9M2008.

The construction works at the residential building located 9б, Kirova Str., borough of Mikhailovka-Rubezhovka, which premises to redeem the bonds of series I-P, are suspended.

Ongoing negative trends in Ukraine`s real estate sector.

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