OREANDA-NEWS. December 29, 2009. Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it downgraded to uaB from uaBB- (uaBB minus) the long-term credit rating assigned to registered housing bonds (series A) issued by Odessa-based Gefest Private Technical Enterprise (‘issuer’ or ‘company’). The outlook on the rating is negative. The amount of the issue is UAH50.5m due Jul.1, 2010. The company’s principal activity is investing and construction. Today the company as a customer constructs a residential and trade complex located in the city of Odessa. To revise the rating Credit-Rating considered issuer’s financial statements for 3Q and 9M2009 and its other inside information.

An obligor or a debt liability with uaB credit rating is characterized with the LOW creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is extremely susceptible to 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 GEFEST group, which companies as general contractors and customers have implemented a number of investment and construction projects located in different Ukraine’s regions, with the overall floor area of 60K sq.m.

The volume of works implemented in the residential and trade complex located 1, Gretskaya Str., Odessa, for which funding the company has issued bonds of series A (according to the company the construction readiness was recorded at 71.4% as at Sep. 30, 2009).

Factors constraining the credit rating

The further funding of the project and repayment of issuer’s loans are contingent upon receipts from sale of apartments/premises/parking lots in the residential and trade complex located 1, Gretskaya Str. under existing environment in the real estate sector, which imposes additional risks for the company’s activities.

The proprietary rights for residential and trade complex located 1, Gretskaya Str., for which funding the company has issued bonds of series A, are pledged as security for a bank loan.

The issuer does nota have experience in redemption of housing bonds.

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