LONDON, Aug. 5 ??“ International ratings agency Fitch assigned UkrChem Capital B.V's issue of $125 million limited recourse loan participation notes a final Long-term 'B' rating, following a review of the final documents, the agency said in a press release carried by Interfax-Ukraine.

The notes are issued solely to finance a loan from Moscow Narodny Bank Limited ("MNB"; rated 'BBB-' (BBB minus)/Stable/'F3' and majority controlled by the Central Bank of Russia) to Stirol (rated 'B'/Stable/'B'), the release says.

Fitch notes that the size of the notes represents a substantial increase from the originally envisaged $100 million. This will increase Stirol's total debt to approximately UAH770 million from the original estimate of UAH644 million.

Based on its FY04 EBITDA, leverage would still be at a conservative 1.4x compared to the previously envisaged 1.3x. However, if based on its lower FY03 performance (EBITDA of UAH342 million), Stirol would breach its total debt/EBITDA covenant of 2.0x, the release says.

At the originally envisaged debt level of UAH644 million, the group would still have complied, albeit marginally, with the covenant, based on its FY03 performance. However, Fitch takes comfort from Stirol's reassurance that the proceeds would be used to partly re-finance existing debt and to strengthen the group's liquidity position. Failure to do so is likely to put downward pressure on ratings, the release says. (om/ez)