Credit Rating, a nationally recognized credit rating agency in Ukraine, reported that it had assigned a long-term credit rating of uaB to the upcoming issue of (A-series) registered special-purpose bonds by Kharkiv-based TOV Batris. The bonds, worth 199.2 million hryvnias, will mature in two years.

Batris’ primary business is real estate investment and development. Currently, the company is constructing a multifunctional center with a parking garage and residential apartments in Kharkiv.

In the course of its analysis, Credit Rating considered the issuer’s financial statements for the years 2005 through 2007 and the first quarter of 2008, as well as the internal information provided by the company.

A borrower or a debt instrument with uaB credit rating has low creditworthiness when compared to other Ukrainian borrowers or debt instruments. This level of creditworthiness is extremely susceptible to adverse changes in commercial, financial, and economic conditions.

Factors supporting the credit rating:

- The issuer has already invested 46.7 million hryvnias – or 24 percent of estimated costs – into the construction of a multifunctional center on Banny Lane in Kharkiv. Premises in the building will be delivered to redeem the bonds.

- In Kharkiv, both housing prices and the demand for housing have been on the rise in recent years.

Factors limiting the credit rating:

- The issuer has no experience in real estate investment and development and has never before redeemed special purpose bonds through the delivery of premises to bond owners.

- The amount of the proposed bond issue (199.2 million hryvnias) far exceeds the issuer’s assets (59 million hryvnias), as of March 31, 2008.

- The issuers equity is negative, 10 million hryvnias in the red.

- The regulations concerning real estate development and financing are vague and subject to change, as is the taxation of development projects.