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

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

Such ratings grades represent the city’s high ability to pay off its financial liabilities and excellent 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.

Were taken into account:

1. The structure of the economic complex of the city and the dynamics of key indicators Kharkiv is a metropolis that has a powerful industrial complex and one of the largest and well-diversified economy among other cities of Ukraine. In 2019 against 2018, there was an increase in such indicators of socio-economic development of the city as: the amount of retail trade (+15%), the volume of export of goods (+14.6%), foreign trade in goods (+8.2%), monthly average wage level (+16.1%), etc. At the same time, some indicators are lower than the average for Ukraine, or showed a downward trend during the period under review.

2. Competitive advantages and disadvantages in comparison with other cities of the country
In Kharkiv, are localized the key government bodies of the region. The city has a significant human potential, good logistics, a high-quality material base for business development, as well as serving, communal and social infrastructure. At the same time, competition for business and labor costs are lower compared to the capital. Local authorities are actively working towards creating a positive image of the city and promoting investment projects aimed at its development, there is experience in cooperation with foreign investors.

3. Financial policy efficiency and the budget indicators
Total revenues to the Kharkiv city budget for 2019 amounted to UAH 15.9 billion (+3.7%). Own budget revenues against the corresponding period in 2018 increased by 19% - up to UAH 11.2 billion; the share of tax revenues in the structure of the city's own income for 2019 amounted to 66%. Moreover, these revenues are diversified by payers and sources, which ensures relative stability and predictability of budget revenues. The city budget remains the donor budget, transferring the reverse subsidy to the state budget.

4. The sensitivity of the budget and the city economy to the impact of negative factors
The city still needs to attract additional financing, including for the modernization of urban infrastructure, housing and communal services. This has already led to the attraction of a significant amount of debt financing by the municipal sector of the city and a corresponding increase in the volume of consolidated debt in previous periods. Also, in the first half of 2020, it is planned to place bonds of G and H Series in the amount of UAH 500 million. The ratio of direct debt as of 01.01.2020 to Kharkiv's own budget revenues in 2019 amounted to 7.6%, which is 4.4 percentage points more than as of 01.01.2019, but the debt burden even taking into account planned bonds placement of G and H Series will remain moderate.

In order to conduct the analytical research, the materials obtained from Kharkiv 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. ІBI-Rating is the largest Ukrainian rating agency. It has been operating since 2005 and has the status of an authorized rating officer from the National Commission for the Securities Market. The Agency provides professional credit rating and counseling services. It is only agency in Ukraine that has bilateral partnership with the European rating agency BCRA, certified by ESMA.

Municipal department
For more information please contact:
Press service of IBI-Rating
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