OREANDA-NEWS. On 23 March 2009 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned a long-term credit rating of uaBBB+ (uaBBB plus) to coupon bonds (series 1-E and 1-F) to be issued by Lutsk city council (city). The amount of the issue is UAH50m, with 5-year original maturity. In the course of the rating procedure Credit-Rating considered citys social-economic and financial indicators recorded in 2004-2008 and its other inside information.

An obligor or a debt liability with uaBBB credit rating is characterized with the SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is 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

High growth rates of budget revenues in the city's general budget fund exclusive of transfers recorded over the past 3 years, specifically the amount of revenues was in excess of 35.1% in 2006, of 51.1% in 2007, and of 34.2% in 2008 as compared to the respective previous periods.

The city budget was independent upon loans from the general treasury account in 2006-2008.

The citys key economic figures grew in 2004-2008, with the majority of them being above countrys averages, in fact the volume of industrial production sales increased by 20.2%; the fixed capital investments rose by 32.5% [1] ; the retail turnover advanced 4.3x.

The number of employees recorded in 2004-2008 (exclusive of small businesses) increased by 24% to 84.8K, which is 40.5% of the citys population, accompanied by decline in unemployment rate by 0.4 p.p., which is lower than the countrys average as of Jan. 1, 2009 of 2.6%.

City mayors and management staffs experience coupled with high consolidation of the city's authorities.

Factors constraining the credit rating

Deceleration in growth rates of the city budget revenues recorded in 2009, which has been prompted by negative impact of crisis in Ukraine's economy.

The city budget remains dependant upon equalization grants from the State budget, which ratio to the revenues of the city budget's general fund exclusive of transfers planned for 2009, is 12%.

The size of the monthly average wage recorded in 2008 is 11.8% lower than the countrys average under city budgets dependency upon gains from the individuals income tax (the share of this source in the general fund of the city budget exclusive of transfers is around 80%).

High deterioration of the city's utilities and transport infrastructure and of the housing sector, which require significant investments for their renovation.