Moody’s assigns Mechel a B1 corporate family rating with stable outlook

Monday, 24 May 2010 16:41:26 (GMT+2)

Mechel, one of the leading Russian mining and steel groups, has announced that Moody's Investors Service, a leading global credit rating, research, and risk analysis agency, has assigned it a B1 corporate family rating (CFR) with a stable outlook.

"The rating will help us in the ongoing optimization of our credit portfolio, in particular to decrease the cost of the debt service and further improve its structure," reads the company's statement.

Accordingly, the CFR of Mechel's reflects: 1) the company's role as a leading domestic steel and coal producer with strong positions in key businesses including production of specialty steel and alloys; 2) the company's possession of the largest coal reserve base in Russia; 3) favorable business profile results from a high degree of vertical integration which ensures stable production and to some extent preserves operating margins; the company has internal captive demand for coking coal and iron ore in steel production and for steam coal in power generation; 4) strategic location of its key assets close to the major steel consuming markets as well as the ownership and control of essential infrastructure including ports, rolling stock and power plants which provide guaranteed access to export markets; 5) combination of underground and open pit mining operations with no significant concentration on any single mine mitigates the risks of interruption in coal production; 6) good disclosure and adequate corporate governance supported by NYSE listing.

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