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Credit-Rating: Fragile Balance – Ukraine’s Economy in March 29.04.2010

Credit-Rating has today published a monthly review of Ukraine’s economic development. The review contains evaluation of economy’s real and financial sectors, balance of payments, currency and stock markets, budget sector and state debt policy, and inflation.

Credit-Rating notes growth in business activities in industrial sector owing to metallurgical, machine-building and chemical companies (the industrial production index was recorded at 116% in March). According to the agency’s estimates the growth of agricultural sector was moderate. The business activities of construction and retailing companies are not going to exceed the figures recorded in the past year and will be constrained by weak growth of effective demand and absence of substantial investments or lending.

The revival in activities of export-oriented companies, as well as soaring investment activities of non-residents following the stabilizing political situation allowed for positive payment balance of USD1bn. The inflow of financial resources prompted increase in bid of foreign currencies in the currency market, which enabled the National Bank to augment its gold and currency reserves with the national currency remaining stable.

In the banking sector the agency notes growing liquidity underpinned by increased resources under low lending activities. The banking sector is rather cautious with resumption in lending, taking into consideration poor credit quality of the majority of borrowers. Credit-Rating also notes that the resource base of the banking sector is primarily formed with short-term funds, which does not allow for resumption of lending in full. The trend of substitution of long-term resources with the short-term ones continued in March – this may negatively affect stability of the banking sector in case the regulator does not sharpen the standard of reserving banks’ short-term borrowings from external markets.

Credit-Rating also notes that the 1Q2010 was rather difficult for revenues to be drawn to the State budget, with low balances on the treasury account were prompting delays in funding payment orders of financial bodies. The hardships with fulfillment of revenues prompted increase in deficiency to UAH5.5bn (with surplus of UAH0.5bn in the similar year-earlier period), which was funded via issuing of domestic bonds. The investors’ interests for purchasing domestic bonds as the least risky investments allowed for decreasing median interest rate to 13.5% in the primary auctions.

Credit-Rating agency has operated in the Ukrainian market since 2001 being committed to assignment of the national scale ratings. The agency has assigned 1081 ratings. As at Apr. 1, 2010 the agency’s list of ratings included 646 ratings: 502 in corporate, 98 in financial and 46 in municipal sectors. In March 2010 the agency assigned 4 ratings, revised 210 ratings, suspended 32 ratings and withdrew 18 ratings.

Information on all credit ratings assigned in accordance with the National Rating Scale may be found in Credit-Rating’s corporate web-site  www.credit-rating.ua , as well as in REUTERS and BLOOMBERG  information systems.


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For investors: new entry
Novokahovskyi Lime-Sand Brick Plant

Purposes of company: Investments
Company description:

Market Overview:  Construction volume is increasing 20-25% annually, creating an increased demand for high quality façade bricks. The industrial capacity of façade bricks is estimated at 200 million bricks per year. In 2006, a construction boom is expected in southern Ukraine, where the plant is located. The product is used mainly by construction companies and private companies.

Project Overview:

  • Using KSE-400 (Germany)
  • Equipment supplier offers trainings for the buyer’s staff
  • Can produce 30 million bricks per year including high quality hollow façade bricks, ordinary bricks, molded bricks, white and colored bricks

Competitive Advantages:

  • Production of lime-sand bricks is considerably more energy efficient than the production of ceramic bricks. Moreover, the project envisions the reconstruction of one of the two pit-type 50-ton lime-burning kilns; using coal, automatic blending, loading, and burning will save on gas
  • Plant produces its own lime; a sand-pit is located close to the plant
  • No high quality lime-sand hollow bricks are produced in southern Ukraine
  • Due to the considerable decrease in the weight of the bricks, delivery and transportation becomes much easier; bricks can be transported by auto, railway (via the plant’s rail track), or by water (a river port is 8 km away)
    Investment Project Progress:  Market research has been conducted

Key Financials:

  • Total Investment - € 1.5 mln
  • Investment Needed - € 1.5 mln
  • Payoff period - 5 years

Branch: Construction materials
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Purposes of company: Investments
Company description:   
Branch: Construction materials
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For Buyers: new entry


Purposes of company: Export
Company description:  
Branch: Construction materials
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«Венбест»

Purposes of company: Distribution
Branch: Furniture
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