Lviv seeks to issue UAH 440 mln bonds in 2018, Fitch rates Lviv 'B-'
Lviv plans a UAH440 million bond issue (to be issued in two tranches in 2018), Fitch Ratings said in a press release on Monday.
"For 2018 Lviv's direct debt may increase to UAH 440 million, or a still low 4.7% of current revenue (from less than 0.1% in 2014-2017), if the city is successful in its planned UAH 440 million bond issue (to be issued in two tranches in 2018)," Fitch said.
Fitch said that the proceeds from the bonds, together with the UAH 55 million of cash accumulated on the city's accounts, will be used for investments.
"The city authorities' main priority is to support the dynamic growth of the city through the development of an innovative local economy. This includes attracting investors from sectors generating higher gross value added such as the IT industry or congress and exhibition tourism by taking advantage of the city's historical heritage," Fitch said.
According to the press release, Fitch Ratings assigned the Ukrainian City of Lviv Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of 'B-'. The Outlooks are Stable.
Positively, the ratings also take into account Fitch's expectations that the city's sound operating results will be maintained over the medium term. The ratings further take into account the city's expected low direct debt over the medium term, as well as moderate contingent liabilities stemming from guarantees issued to municipal companies.
The ratings reflect a weak institutional framework for subnationals in Ukraine, leading to unpredictable fiscal changes. This, together with the overall weakness of sovereign public finances in Ukraine, results in uncertain growth prospects, Fitch said.