Moodys Assigns Ba3 to Metinvest
OREANDA-NEWS. On September 09, 2008 Moody's Investors Service has assigned a Ba3 corporate family rating to Metinvest B.V. (the Netherlands) with a positive outlook, reported the press-centre of Metinvest.
At the same time Moody's has withdrawn the corporate family rating for Azovstal Steel Plant and assigned an LGD rate for the outstanding bond of Azovstal Capital B.V. of LGD4, 66%. Assigning a privately-owned company with a rating surpassing the similar rating of the country is unprecedented for Ukrainian finance market.
Being published, the corporate family rating of Metinvest will cover all enterprises of the Group and include corporate ratings of enterprises, in particular Azovstal, previously assigned by the Investor Service.
The Ba3 corporate family rating reflects a stable and high financial performance and operations effectiveness of the Company owing to its strong market position in the steel and iron ore market segment; favourable market conditions on the global steel and iron ore market; and high isolation of the company from fluctuations in prices for main raw materials.
The rating also reflects Moody's expectation that the company's debt/EBITDA will remain below 1.5x despite the significant programme for modernization and organic growth in the next five years. It also assumes that the dividend policy will give priority to capital expenditure for dividend payments.
The rating also takes into account other factors, including a successful financial 2-year background; business development under unstable political and economic environment with regard to fiscal and legal conditions in Ukraine; dependence on highly volatile spot market for semi-finished steel products; and dependence on exports and risks related to the execution of the capital expenditure programme.
"We are confident that our efforts won't remain unnoticed by our partners and leaders of the country”, said Sergey Novikov, CFO of Metinvest Holding. “METINVEST's rating upgrade will surely contribute to upgrading Ukraine's rating. In turn, this means more favourable loan conditions for Ukrainian business as such".
The Outlook on the company's rating is positive reflecting the expectation that the positive steel cycle will continue over the short to intermediate term. If the company succeeds to keep the capital structure at the conservative levels, an upgrade could be possible within the next 12 - 18 months.
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