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IBI-Rating has affirmed the credit rating and the rating of investment attractiveness of Cherkasy city

17.07.2020
National rating agency IBI-Rating informs on affirming of the credit rating of Cherkasy city at uaBBB grade with an «evolving» outlook and the rating of investment attractiveness at invВВВ+ grade.

Such rating grades represent sufficient capacity of the city to pay off its financial liabilities and sufficient investment attractiveness. The «evolving» outlook, with the highest probability, implies of rating changes during the year. Currently, such rating outlook is applied to all clients of the Agency. It is due to increased uncertainty regarding the actions of authorities and business entities in case of aggravation of the epidemiological situation in Ukraine and the world. The notation «+» indicates an intermediate rating category relative to the main category.

Were taken into account:

1. The structure of the economic complex of the city and the dynamics of key indicators
The Cherkasy city has a sufficiently diversified economy and a powerful industrial complex. The basis of industry is formed by enterprises of chemical, food industry and mechanical engineering. More than 200 industrial enterprises operate in the city. A number of indicators that characterizing city's economy and the labor market exceed the corresponding national averages.

2. Competitive advantages/disadvantages in comparison with other cities of the country
The city is located at the intersection of important state transport routes: water, highway and rail, which gives the base of creating a powerful logistics center. Cherkasy has a well-developed engineering and transport infrastructure, and local authorities are making significant efforts to further improve it, including through the implementation of investment projects involving foreign investments. The advantage of the city is also a strong human potential. At the same time, competition for business and the cost of labor resources is lower compared to the capital.

3. The effectiveness of financial policy and budget indicators

According to the results of 2019, the city budget was executed with a deficit of UAH 13.8 million (with a planned deficit of UAH 35.4 million). The basis of budget revenues are tax revenues — their share in the total revenues of the city for 2019 amounted to 61%. Such revenues are diversified by payers and industries, which ensures the relative stability and predictability of budget revenues. In terms of budget security, the Cherkasy city continues to outpace the national average.

4. The sensitivity of the budget and the city economy to the impact of negative factors

The City Council acts as a guarantor for the debt obligations of utilities in foreign currency to international financial organizations in the framework of projects aimed at improving energy efficiency and modernization of urban infrastructure. This implies a certain sensitivity to currency risks. But the debt burden during 2018-2019 decreased and is currently moderate — as of 01.01.2020, the consolidated debt amounted to 27% of own revenues, and direct debt burden — only 0.08%.

In order to conduct the analytical research, the materials obtained from Cherkasy city have been used, including: indicators of the social and economic development, statistical data, treasury statements, program materials, other necessary internal information, as well as the information from the public sources, which the Rating agency considers credible.

Municipal department
For more information please contact:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua