Moody’s affirms MMK’s Ba3 rating with stable outlook

Wednesday, 08 April 2015 16:29:19 (GMT+3)   |  
       

Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has announced that Moody's Investor Service ("Moody's") has confirmed the company's Ba3 corporate family rating (CFR) and Ba3-PD probability of default rating (PDR).

The outlook on the ratings is stable. This
concludes the review for the downgrade initiated by Moody's on December 23, 2014 when MMK's ratings were put on review in a combined decision to place a number of Russian non-financial corporates on review for downgrade, reflecting the severe and rapid deterioration in the operating environment in Russia and the heightened risk of a more prolonged and acute economic downturn than originally anticipated.

Moody's noted in its press release that MMK's
competitive cost profile as evidenced by slab cash costs falling to $243/mt in the fourth quarter of 2014 down from $308/mt in the third quarter will remain strong on the back of falling iron ore prices, better raw materials structure and the 42 percent ruble devaluation in 2014.

According to Moody's, this cost improvement, combined with MMK's adequate liquidity profile, higher year-on-year share of export deliveries and deleveraging achieved in 2014, contributed to strong financial results in 2014 and created headroom in the company's Ba3 rating category. This additional headroom will allow the company to comfortably weather 2015.


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