Credit-Rating foresees revival in Ukraine’s bond market in 2011

26.01.2011

Credit-Rating believes that the borrowings market is likely to fully recover in 2011. Unlike in 2 previous years, active participants of the domestic bond market in 2011 will be represented by not only the government and large state companies, but also by other entities. A number of private companies have already announced their plans of issuing bonds for the amount of over UAH3.3bn in 1H2011.

A positive trend of recovering in Ukraine’s bond market have emerged and strengthened over 2010. In the period of restoring investment activities under revival in the global and national economies the state was the most active player in the market. In 2010 the government offered bonds in the domestic market for a. UAH70bn which was over 92% of the total amount in the market. The key factors that impede development of corporate bonds market were low credit activity of the financial sector prompted by conservative lending policy, and by lack of confidence in issuers of the private sector after numerous defaults during the crisis period.

However, a deeply plummeting yield of the government’s bonds by end-2010 under rising liquidity of the banking system have created preconditions for restoring investors’ interest to corporate securities. Considering high demand for credit resources from the side of potential Ukrainian borrowers, Credit-Rating anticipates reentering the market by issuers that have successfully survived the crisis keeping positive credit history and are capable of displaying sufficient level of creditworthiness.

On the stage of recovery in the bond market a special attention is paid to a high-quality assessment of risks by investors with the most efficient tool being credit ratings produced by independent rating agencies which assessments have been trialed by the crisis. Credit-Rating notes considerably growing issuers’ interest towards rating services, which is based upon necessity in building communication channels with investors, not by regulatory requirements. Active use of credit ratings produced by reputable rating agencies will allow investors to mitigate credit risks, and credible investors – to restore confidence in their debt obligations.

Credit-Rating agency has operated in the Ukrainian market since 2001 being committed to assignment of the national scale ratings. The agency’s track record encompasses 1128 ratings assigned over its entire period of operation including 866 issue ratings. A total size of bond issues rated by the agency is UAH71.6bn.

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

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