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The rating agency IBI-Rating has affirmed the credit ratings of three railways and their bonds
13.10.2015IBI-Rating informs on updating of the credit ratings of three Ukrainian railways and their interest bearing bonds:
- long term credit rating of "Lviv Railway" State Territorial Branch Association and issues of interest bearing bonds of D-G series (the total nominal amount is UAH 200 million) and H-L series (UAH 680 million) has been affirmed at uaC grade, with a “developing” outlook.
- long term credit rating of "South-Western Railway" State Territorial Branch Association and the issue of interest bearing bonds of G-M series (total nominal amount is UAH 320 million) and N, O series (UAH 650 million) has been affirmed at uaC grade, with a “developing” outlook.
- long-term credit rating of the "Southern Railway" State Enterprise and issues of interest bearing bonds of C series (nominal amount is UAH 330 million), Series D-G (UAH 220 million) and the H-M series (UAH 890 million) has been affirmed at uaC grade, with a “developing” outlook.
The credit ratings have also been saved in the Ratings Watch List. The affirmation of the credit ratings is due to the continuation of the restructuring of part of the enterprises’ debts, as well as the available overdue debts on repayment of a number of loans, which was the basis for the ratings downgrades in May 2015. The Issuers exercise the servicing of bond loans on payment of interest income timely and in full. According to the information provided by Ukrzaliznytsia major creditors granted an agreement in principle to restructure most of the debt, which is subject to restructuring. A further review of the credit ratings and removing them from the Ratings Watch List will depend on the success of negotiations on restructuring, the state of servicing of debt obligations as well as on the results of financial and economic activity of the Issuers according to the results of 2015.
Net income over 6 months of 2015 of "Lviv Railway" State Territorial Branch Association amounted to UAH 5 318.9 million, which is by 50.4% more than in the same period of the previous year, net income of "South-Western Railway" State Territorial Branch Association amounted to UAH 6 418.3 million, which is by 37.6% more as compared to the same period of the previous year, and net income of the "Southern Railway" SE amounted to UAH 4 689.2 million, which is by 41% more than in the same period of the previous year. The growth occurred due to the increased revenues from freight and passenger transportation, by raising tariffs, which took place in the Ist half of 2015, as well as the revenues generated from supplementary activities. It should be noted that during the analyzed period the issuers’ activities were profitable.
A positive impact on the credit ratings grade may have the following: completed process of debt restructuring; the growth of financial results and improved performance indicators; reduced debt burden; modernization of infrastructure and rolling stock. A negative impact on the credit ratings grade may have the following: failure to fulfill debt obligations, substantial growth of the debt burden including as a result of the national currency devaluation while maintaining a significant amount of foreign currency obligations, decreased performance indicators, as well as deterioration of political and economic situation in the country.
In order to carry out the analytical research the materials obtained from "Lviv Railway" State Territorial Branch Association, "South-Western Railway" State Territorial Branch Association and "Southern Railway" SE were used, including the financial statements for 2012-2014 and 6 months of 2015, parameters of bond issues, the information on the activities of the Issuers, other necessary internal information as well as the information from public sources, which the rating agency considers reliable.
Corporate department
For more information please contact:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua
Net income over 6 months of 2015 of "Lviv Railway" State Territorial Branch Association amounted to UAH 5 318.9 million, which is by 50.4% more than in the same period of the previous year, net income of "South-Western Railway" State Territorial Branch Association amounted to UAH 6 418.3 million, which is by 37.6% more as compared to the same period of the previous year, and net income of the "Southern Railway" SE amounted to UAH 4 689.2 million, which is by 41% more than in the same period of the previous year. The growth occurred due to the increased revenues from freight and passenger transportation, by raising tariffs, which took place in the Ist half of 2015, as well as the revenues generated from supplementary activities. It should be noted that during the analyzed period the issuers’ activities were profitable.
A positive impact on the credit ratings grade may have the following: completed process of debt restructuring; the growth of financial results and improved performance indicators; reduced debt burden; modernization of infrastructure and rolling stock. A negative impact on the credit ratings grade may have the following: failure to fulfill debt obligations, substantial growth of the debt burden including as a result of the national currency devaluation while maintaining a significant amount of foreign currency obligations, decreased performance indicators, as well as deterioration of political and economic situation in the country.
In order to carry out the analytical research the materials obtained from "Lviv Railway" State Territorial Branch Association, "South-Western Railway" State Territorial Branch Association and "Southern Railway" SE were used, including the financial statements for 2012-2014 and 6 months of 2015, parameters of bond issues, the information on the activities of the Issuers, other necessary internal information as well as the information from public sources, which the rating agency considers reliable.
Corporate department
For more information please contact:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua