OREANDA-NEWS. National Rating Agency has affirmed its national scale ‘A’ credit rating on North-East Coal Company CJSC (NECC). The outlook for the rating is Stable. The company’s first-time credit rating of ‘A’ from NRA was assigned on Dec. 29, 2011 and affirmed each consecutive year (the latest affirmation dates Fe. 18, 2015).

In accordance with NRA’s rating methodology, NECC’s rating is tied to the rating of its parent Eastern Mining Company LLC (or VGK Group, as it is abbreviated in Russian rated ‘A’ by NRA). NECC undertakes coal prospecting and production in Magadan Oblast. It is a VGK Group subsidiary falling into the parent’s consolidation framework. VGK Group’s and NECC’s credit ratings are influenced by the same supporting and constraining factors.

VGK Group’s rating reflects the step-by-step implementation of its growth strategy, resulting in the increasing economy of scale and debt decrease, positively influencing the group’s financial performance, its comfortable debt maturity profile and its strong beneficial owners, capable to provide support in case of distress. NRA notes NECC’s sizeable resource base size and its growth potential, well-diversified export base, its ownership of an important element of transport infrastructure (Shakhtersk seaport) and leadership by coal production and shipment volumes in its home region. NRA also notes that VGK Group’s investment projects are among the Magadan Oblast government’s priorities.

Offsetting these strengths are VGK Group’s relatively high debt, associated with its growth strategy implementation, the continued downward price pressure in the industry (In NRA’s opinion. The latter risk is mitigated by the groups predominantly export sales in the context of the falling Ruble low product transportation costs, as the company does not use railway.

NRA’s analytical products, including ratings and the contents of this press release, are statements of NRA’s independent opinion as of the date they are expressed and not statements of fact or recommendations to make any investment decisions or conduct any stock market transactions. NRA is not responsible for any results obtained from the use of opinions and/or information contained in this press release.

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