OREANDA-NEWS. On 16 February 2009 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned a long-term credit rating of uaCCC (provisional) to registered housing bonds (series A, B) issued by Odessa-based Runicom Budinvest LLC (`issuer` or `company`). The amount of the issue is UAH305.3m due Mar. 31, 2010. The company`s principal activity is investing and construction. Today the company constructs a complex of residential buildings with utility facilities, located in Odessa Oblast. In the course of analysis Credit-Rating considered issuer`s financial statements for 2004-2007 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 amount of funds invested in construction of complex of residential buildings located in Vinogradnyi block of Ulyanovka residential area, borough of Mizikevitcha, Ovidiopol Districts of Odessa Oblast, which premises to redeem the bond issue, is UAH95.7m or 28.8% of the project`s estimated cost, as of Dec. 24, 2007.

The CAC Small Private Enterprise, which owns 96.65% of issuer`s authorized stock, has experience in construction funding with the funds raised from the issuance of bonds and in redemption of housing bonds, in fact in 2007 CAC SPE commissioned a residential building of 28.5K sq.m. located 38, Sakharova Str., Odessa, in which 4.3K sq.m. were delivered as redemption of series A housing bonds (with a 2-month delay).

Factors constraining the credit rating

Ongoing negative trends in Ukraine`s real estate sector, which curbs access to funding.

Issuer`s information opacity.

The amount of the bond issue of UAH305.3m exceeds size of issuer`s assets of UAH77.1m and equity of UAH1.5m as of Dec. 31, 2007.

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