OREANDA-NEWS. September 29, 2009. Credit-Rating, a nationally recognized credit rating agency in Ukraine has today announced that it downgraded to uaBB from uaBBB the long-term credit rating assigned to registered housing bonds (series A) issued by Odessa-based Alyans-Zhylbud LLC (‘issuer’ or ‘company’) for the amount of UAH119.3m, with 5-year original maturity. The outlook on the rating is negative. The company’s principal activity is investing and construction. Today the company constructs 6 residential buildings located in the city of Odessa. To revise the rating Credit-Rating considered issuer’s financial statements for 2Q2009 and 1H2009 and 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.

Negative outlook indicates that there is a possibility to downgrade the rating in the course of the year, on condition that negative tendencies are retained and current risks are realized.

Factors maintaining the credit rating

The issuer is associated with Alyans corporation, which is one of the leading construction and real estate companies in the city of Odessa.

The issuer has experience in investing and construction within Alyans corporation, specifically in 2006 the issuer has commissioned a two-sectional residential building located in district III-4-1, 17-B and -G, Kotovskogo Str. of 11.2K sq.m. total floor area.

Factors constraining the credit rating

Deceleration in the pace of construction works, which are partially funded from housing bonds.

The proprietary rights for apartments in the buildings, which construction is funded with the housing bonds are pledged as security for bank loans.

Opacity with regard to company’s capacity to meet its commitments on loans under turbulence in the financial market.

The construction of the residential building located 5-7, Golovkovska Str (which readiness as at June 30, 2009 was 6%), which is funded with housing bonds, is currently on the initial stage exposing the project to risks of late commissioning and redemption of housing bonds (the term of repayment is Nov. 16, 2010 – Nov. 25, 2010).

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

The Alyans corporation does not have consolidated audited financial statements.

Ongoing negative trends in Ukraine’s real estate sector.

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