Moody's rates Kyiv notes B2

Moody's Investors Service said it assigned a provisional B2 long-term foreign-currency senior unsecured debt rating to the forthcoming loan participation notes of the City of Kyiv to be launched by the end of June 2011.

The outlook is stable.

Moody's said it understands that the issuance size will not exceed $300 million and that the notes' maturity will be between three to five years.

The notes will be issued on a limited-recourse basis by Kyiv Finance plc for the sole purpose of funding a loan to Kyiv.

The ratings reflect the fundamental credit quality of the underlying obligor - the City of Kyiv - both in local- and foreign-currencies, the agency said.

The ratings also consider its weak operating margins, pressured by volatile budget revenue due to the instability of the Ukrainian economy, Moody's said.

These factors are partially offset by the city's moderate debt burden, improving relationships with the central government and some improvement in the city's tax revenue stream, the agency added.

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