OREANDA-NEWS. September 7, 2012. Standard & Poor's Ratings Services assigned 'B' long-term corporate credit rating to Ukraine-based crop producer and trader Ukrainian Agrarian Investments S.A. (UAI). The outlook is stable.

This is the highest rating currently assigned to a Ukrainian agriculture company by international rating agencies. Similar ratings have been assigned to Mriya (S&P, B/stable), Kernel (Fitch, B/stable) and MHP (Fitch, B/stable). Ukraine’s sovereign rating is one notch higher (S&P, B+/negative).

“Securing a credit rating from the reputable international agency is a logical step in our development”, says Aleksandr Kostenko, UAI’s CEO. We view it as a confirmation of our strategy. We are building a vertically integrated agricultural holding by investing into new machinery, technology and infrastructure and are prepared for a dialogue with new creditors and investors interested in participating in the company’s growth”.

S&P believes that UAI benefits from its lease rights to high-quality farmland, low production costs, and the currently favorable trading environment (in terms of pricing and demand) for its crops.

In addition to country risks inadvertently inherent in any Ukrainian business, S&P notes that UAI faces financial risks related to seasonality of agricultural business and the company’s expansion program.

UAI expects to generate more than 50% of its sales this year from corn; up to 20% from sunflower seeds, oil, and meal; and 15% from wheat. The company estimates that it sells about 30% of production domestically and 70% internationally, including in Europe, Northern Africa, and the Middle East.

S&P anticipates that UAI will realize significant sales and profit growth through the financial year ending December 31, 2012. The rating agency forecasts that UAI's substantial trading gains will be only moderately offset by higher land lease costs and lower value-added tax (VAT) retention.

Ukrainian Agrarian Investments (UAI) is a large scale farming business located in Ukraine founded in 2005 by financial investors. UAI’s leased land portfolio stands at 240,000 ha; the company consists of 62 farms and 5 grain silos employing over 900 people in 16 regions of Ukraine with the number of employees growing to over 2,000 in high season.

With offices in 23 countries and a history that dates back more than 150 years, Standard & Poor’s is known to investors worldwide as a leader of financial-market intelligence. Today Standard & Poor’s strives to provide investors who want to make better informed investment decisions with market intelligence in the form of credit ratings, indices, investment research and risk evaluations and solutions.