S&P gives Lugansk bond B, uaBBB+

Standard & Poor's said it assigned its B long-term local currency debt rating and uaBBB+ Ukraine national-scale debt rating to the proposed Ukrainian hryvnia 50 million 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 of less than 16% per year and a five-year maturity," said S&P credit analyst Boris Kopeykin.

The agency said that the city plans to place the issue in July-August 2008, adding that proceeds from the bond will be used for capital investments, including public transport, housing utilities, heating and waste collection.

"The ratings on the bond are the same as those on the city, an industrial center in Eastern Ukraine and reflect the poor financial position of the city's municipal utilities, as well as Lugansk's low financial flexibility and high infrastructure needs," said Kopeykin.

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