Fitch Ratings has revised Metinvest B.V.’s outlook to stable from negative, the Long-Term Issuer Default Ratings (IDRs) and senior unsecured rating for the bonds of the Ukrainian integrated steel company are affirmed at ‘BB-‘, the recovery rating is ‘RR4’, the rating agency said on its website. “The revision of Metinvest’s outlook reflects strong cash flow generation linked to supportive steel and iron ore markets amid the global economic recovery and our expectation of a gradual reduction of gross debt to $ 2.9 billion ($ 2.5 billion net; both Fitch-adjusted values) over the next three years. It also takes into consideration that some of this cash flow will be used for earnings accretive growth, including taking control of Pokrovske Coal and incremental capital expenditure,” the report says.
“Fitch now forecasts funds from operations (FFO) gross leverage of 1.5x-1.6x over the medium term, providing for very comfortable headroom compared to the negative ratio guideline of 2.5x for the ‘BB-‘ rating. But we note that the company does not have a formal dividend policy or gearing target,” it says.
Metinvest is a vertically integrated group of mining and metallurgical enterprises. Its enterprises are located in Ukraine – in Donetsk, Luhansk, Zaporizhia and Dnipropetrovsk regions, in European countries. In particular, in Bulgaria there is Promet Steel plant with a capacity of 500,000 tonnes of rolled metal per year, in Italy – Metinvest Trametal and Ferriera Valsider with a total capacity of 1.2 million tonnes per year. In the UK, the company owns Spartan UK plant that can produce 200,000 tonnes of rolled steel per year.
The main shareholders of the holding are SCM Group (71.24%) and Smart-Holding (23.76%), which jointly manage it.
Metinvest Holding LLC is the management company of Metinvest Group.
FITCH RATINGS, METINVEST, STEEL COMPANY
