Credit-Rating confirms the rating of Odesa at uaАА-

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Expert Opinion

09.11.2010

Credit-Rating: Ratings For Bond Issues Mandatory

Due to recurring inquires with regard to mandatory nature of ratings assigned to bond issues and mortgage bond issues, Credit-Rating notes that pursuant to the Law of Ukraine ‘On State Regulation of Rating Services Market in Ukraine’ (Article 41), all types of securities issues are subject to rating assessment, except for shares and securities issued by the state, the State Mortgage Institution, and non-diversified mutual funds.

The Resolution #1057 of 16.10.2010 adopted by the State Commission for Securities and Stock Market of Ukraine (‘the Commission’) titled ‘On Amendments to Certain Regulations of the State Commission for Securities and Stock Market’ concerns improvements for the procedures of registration of securities issues and shall not abolish mandatory nature of ratings. Oksana Voytova, the Head for Division of Financial Instruments of Securities Market in the Department of Corporate Relations of the Commission said at a round table conference ‘Regulation of Rating Services Market: What Must Be Changed?’ on October 27th that ‘..the issuers are not exempt from being assigned a credit rating by a credit rating agency. The issuers are bound hereto, yet being exempt from receiving a credit rating before application. The issuers may get a credit rating either simultaneously or later – anyway, they are obliged to receive a credit rating’. Changes in regulations of the Commission shall be deemed as measures aimed at quicker issuers’ access to capital market with mandatory informing potential investors on risks associated with investing in bonds, with the help of credit ratings.

The regulations of the Commission state that the prospectuses of the bond issues of corporate issuers, of local authorities, and prospectuses of mortgage certificates and certificates of real estate operations funds shall contain information on a credit rating, its assignment or revision date, and name of a credit rating agency. Failure to meet the requirements set in the Law of Ukraine ‘On State Regulation of Securities Market in Ukraine’ and the Regulations of the Commission regarding disclosures by securities issuers, including the disclosure of a credit rating, date of its assignment or revision, and name of a credit rating agency, may entail imposing a penalty on this issuer and application of financial sanctions by the Commission (i.e. multiple imposing of fines of up to UAH85K).

The more detailed comments on this issue may be viewed in Credit-Rating’s web-site in ‘Regulations’ section.

Credit-Rating agency has operated in the Ukrainian market since 2001 being committed to assignment of the national scale ratings. The agency has assigned 1109 ratings. As of November 1, 2010 Credit-Rating maintains monitoring of 616 ratings, in fact 459 of corporate, 103 of financial and 54 of municipal sectors.

Information on all credit ratings assigned in accordance with the National Rating Scale may be found inREUTERS and BLOOMBERG information systems.

For more information, please contact:
Information and analytic department
Sergey Rozumyak +38044490 25 50
SRozumyak@credit-rating.com.ua
Denis Rudenko
DRudenko@credit-rating.ua

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