December 22, 2003 | Cbonds
|Standard & Poor's Ratings Services said today it affirmed its 'B' issuer credit rating on the City of Kyiv (or Kiev), the capital and financial center of Ukraine (B/Positive/B), following a review. The outlook is stable.|
"The rating on Kyiv is based on the economic and financial benefits resulting from its position as the capital and largest city of Ukraine, improved liquidity, and growing debt management experience," said Standard & Poor's Public Finance credit analyst Boris Kopeykin. "The ratings are constrained by Kyiv's limited fiscal flexibility due to the central government's control of major revenues, and evolving interbudgetary relations. The city also needs to improve management sophistication and transparency." The rating on the city also reflects significant infrastructure financing needs, growing debt, and high exposure to foreign currency risks.
The stable outlook reflects Standard & Poor's expectation that the city's growing economy and personal wealth levels will compensate for potential losses due to the expected decrease in personal income tax from 2004. The outlook also incorporates Standard & Poor's expectation that the city will maintain political stability and continuity of financial policies, and will increase its operational and financial transparency. Standard & Poor's will monitor Kyiv's debt issuance plans. The debt burden is manageable at this rating level, but debt growth combined with foreign exchange risks is a concern.