OREANDA-NEWS. October 12, 2009. Fitch Ratings maintained Ukraine-based TMM Real Estate Development plc's (TMM) Long-term foreign and local currency Issuer Default ratings (IDRs) of 'CC' and National Long-term rating of 'B(ukr)' on Rating Watch Negative (RWN). The ratings were originally placed on RWN on 2 December 2008. Fitch now expects to resolve the RWN by end-December 2009.

Fitch notes that the Ukrainian residential property market, has suffered a significant fall in demand following the country's macroeconomic turmoil. The RWN continues to reflect Fitch's concerns about TMM's weak liquidity and the poor conditions currently prevailing in the Ukrainian residential property market. Although there have been some tentative signs of stabilising prices in the Kiev market (in UAH terms), the market remains over-supplied, and Fitch does not expect a significant improvement in market conditions for the foreseeable future given the weak wider Ukrainian economy and the lack of availability of mortgage and development finance. Based on the above, Fitch forecasts that TMM may not generate sufficient operational cash flow in 2009-2011 to cover its interest costs.

Nevertheless, Fitch positively notes the progress TMM has made to date with resolving its short-term debt problem. Since November 2008, the company has managed to refinance all of its USD65m of short-term debt, including UAH150m (USD18.7m equivalent) of bonds that matured on 1 October 2009. As a result, TMM now has no major debt maturities until May 2011 (when a USD18m equivalent revolving credit facility matures). A large part of this refinancing has come from a UAH310m (USD37m) credit received in February 2009. Fitch views the willingness of local banks to lend to TMM as a positive indicator of the company's ability to access financing.