The international rating agency Fitch Ratings has affirmed the long-term issuer default rating (IDR) in foreign and national currencies and the senior unsecured rating of Metinvest Mining and Metallurgical Group at ‘ССС’, the recovery rating is ‘RR4’.
“Metinvest’s ratings reflect the company’s sufficient funding over the next six months, supported by cash flow generation from its international asset base, few significant short-term maturities and existing cash position. This also reflects increased operational risk for the company following the military invasion Russia to Ukraine, including the occupation or damage of some of its assets, as well as severe logistical restrictions,” Fitch explained in a press release on Tuesday.
At the same time, it is noted that about a third of the company’s EBITDA in 2022 will be generated by its international assets.
The ‘CCC’ rating reflects Metinvest’s increased operational and financial risks. Ferrexpo plc has a higher ‘CCC+’ rating due to its lack of financial debt. Metinvest’s business profile benefits from upstream assets outside of Ukraine, maintaining its rating above Interpipe Holdings plc (CCC-), whose assets are wholly concentrated in Ukraine,” the agency explains.
Analysts predict that Metinvest’s sales will be around 50% of 2022 levels, with a gradual recovery between 2023 and 2025.
In addition, experts suggest that Metinvest will be considered an operating company in the event of bankruptcy and will be reorganized, but not liquidated.
According to analysts, Metinvest has limited liquidity: the company keeps most of its cash in offshore zones. The company continues to generate significant cash flows from its coal assets in the US, as well as its steel mills in Europe, and its iron ore and steel assets in Ukraine. This has helped offset the outflow of working capital in recent months.
Metinvest has minor upcoming maturities in 2022: its next significant maturity is $176 million due in April 2023 in connection with the redemption of its bonds, according to a press release.
As Yury Ryzhenkov, general director of Metinvest, said, the company is servicing its credit obligations, including Eurobonds, and intends to continue doing so in the future.
“We have not declared force majeure on debt. Unlike many Ukrainian issuers, we continue to service our entire loan portfolio, including planned payments on Eurobonds. And I think that we should have enough strength to do this,” he said. he.
Metinvest is a vertically integrated group of mining and metallurgical enterprises. Its enterprises are located in Ukraine – in Donetsk, Lugansk, Zaporozhye and Dnepropetrovsk regions, in European countries. In particular, in Bulgaria there is a Promet Steel plant with a capacity of 500 thousand tons of rolled metal per year, in Italy – Metinvest Trametal and Ferriera Valsider with a total capacity of 1.2 million tons per year. In the UK, the company owns the Spartan UK plant, which can produce 200 thousand tons of rolled steel per year.
The main shareholders of the holding are the SKM group (71.24%) and Smart Holding (23.76%), which jointly manage it.
Metinvest Holding LLC is the management company of the Metinvest group.
