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

09.12.2020
National rating agency ІВІ-Rating informs on affirming of the credit rating of Odesa at uaА grade with an «evolving» outlook, and the rating of investment attractiveness at invAA- grade.

Such rating grades represent the excellent investment attractiveness and strong ability of the city to pay off its financial commitments. 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.

The affirmed rating grades are due to:

1. The structure of the economic complex of the city and the importance of indicators of socio-economic development
Odesa is the economic center of the southern part of Ukraine and one of the largest logistics centers in Ukraine. A large number of operating enterprises, the status of one of the largest tourist centers in the country and more than 1 million people provide high domestic demand for goods and services, as well as create a good foundation for further development of the manufacturing sector and transport industry. As a result, a number of indicators of socio-economic development of Odessa per capita exceeds the average in Ukraine, in particular: the volume of retail trade, foreign trade turnover of services, the volume of commissioned housing.

2. The level of budget support of the city and the debt burden
Odesa is characterized by a high level of budget security: the amount of own budget revenues per capita in the first half of 2020 amounted to UAH 3.7 thousand, which is higher than in Ukraine as a whole (UAH 3.3 thousand). The budget of Odesa is characterized by a sufficient level of liquidity. The budget surplus in the first half of 2020 amounted to UAH 64.36 million. Odesa City Council and utilities are raising funds from domestic banks and international institutions, including for the modernization of infrastructure. The direct and consolidated debt burden of Odessa City Council is moderate. At the same time, maturities are diversified in time, which avoids peak loads.

3. Sensitivity of the budget and the city's economy to the influence of negative factors
The city has a diversified economy and a moderate sensitivity of the budget to the activities of individual enterprises and industries: budget revenues for 6 months. In 2020, only 7.94% of the top 20 taxpayers accounted for the amount of tax revenues. The introduction of quarantine restrictions at the end of the Q1 of 2020, as well as the exemption of enterprises from paying certain taxes during the quarantine period led to a certain reduction in tax revenues, but in the first half of 2020 own budget revenues of Odesa decreased by only 0.96% similar period of the previous year.

4. Natural-geographical potential and availability of material base for business development
Favorable geographical location and natural and climatic conditions are advantages for the development of foreign economic activity and attracting investors. Good provision of health, education and culture, as well as the presence of historical monuments provides an opportunity to develop tourism. The city has a strong human potential due to the presence in the city of numerous universities, vocational education institutions and research institutes. At the same time, the cost of labor resources is lower compared to the cost in the capital. Additional benefits are the developed engineering and transport infrastructure and the efforts of local authorities to modernize it, as well as the policy of the city authorities aimed at improving the investment climate, including the creation of free economic zones.

In order to conduct the analytical research the materials obtained from Odesa 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