S&P gives Lugansk bond B

Standard & Poor's said it assigned its preliminary local currency B long-term debt rating and uaBBB+ Ukraine national-scale rating to the proposed Ukrainian hryvnia 29.3 million debut senior unsecured bond to be issued by the City of Lugansk (B/stable, Ukraine national-scale uaBBB+).

The issue will have quarterly fixed-coupon payments below 16% per year, the agency said.

According to S&P, the ratings on the bond are the same as those on the city, an important industrial center in the east of Ukraine and reflect Lugansk's high contingent liabilities related to municipal utilities, low financial flexibility and high infrastructure needs.

The ratings are supported by the city's currently zero debt, modest but stable financial performance and growing revenues, S&P noted.

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