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Credit-Rating: A Ban on Raising Funds Before Obtaining Permission for Construction Will Not Affect Risks in the Sector 17.05.2010

Credit-Rating notes that the introduction of a ban on raising funds in the construction sector before obtaining all necessary permitting documents for construction works will not considerably mitigate investment risks in the sector, as this ban repeats requirements set by the National Commission for Securities and Stock Market.

On May 11, 2010 Verkhovna Rada has passed a bill 2464 titled "On introduction changes to certain laws on enhancements of state regulatory policy in construction sector" which puts a ban for raising funds by financial institutions which are managing funds for construction financing before all necessary documents for performing construction works have been obtained. However in end of December 2007 the State Commission for Securities and Stock Market of Ukraine made amendments to procedures of bond issuances (#2371 of Dec. 27, 2007). They stated necessity of availability of all permitting documents with the issuer while making registration of issue of housing bonds. Thus, the procedure of raising funds for construction financing was sharpened already then.

Credit-Rating’s note: Over 380 of issues of housing bonds (or 85% of overall volume) in the amount of around UAH30bn have been rated by the agency in the speculative grade. For the majority of such issuers had a mix of risks, which realization in the crisis prompted failure or delay in payments on their obligations.

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 May 1, 2010 the agency’s list of ratings included 638 ratings: 493 in corporate, 98 in financial and 47 in municipal sectors.

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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