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City of Kyiv Proposed $150 Mil. Loan Notes Transaction Assigned 'B' Rating

July 29, 2003 | Cbonds

Standard & Poor's Rating Services said today it assigned its 'B' long-term senior unsecured debt rating to the proposed $150 million loan participation notes of the City of Kyiv (or Kiev; B/Stable/--), maturing in August 2008. The loan participation notes will be issued by Dresdner Bank AG (A/Negative/A-1) to fund a loan to Kyiv. The bank will not provide any payment guarantees, and debt servicing on the notes depends solely on Kyiv's ability to repay the loan. The proceeds of the loan will be used for capital investments in public utilities and transport infrastructure.
"The rating on the notes is equalized with the issuer credit rating on the city. The rating on Kyiv is constrained by the city's relatively low revenue and expenditure flexibility, significant infrastructure needs, low liquidity, and slowly developing management systems," said Standard & Poor's credit analyst Boris Kopeykin. The city's liquidity is below average compared with its international peers. The rating is supported by above-national-average wealth, Kyiv's position as the Ukraine's engine of economic growth, and sound financial performance demonstrated by operating balances of more than 20% of operating revenues and small surpluses after capital expenditure. In addition, recent strengthening of the Ukrainian government's financing strategy to meet its annual borrowing requirements has had a stabilizing impact on local governments in Ukraine, including Kyiv.

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