Russian steel producer Novolipetsk Steel (NLMK) has announced that the international rating agency Standard & Poor's has raised its outlook for NLMK's BBB- corporate rating from ‘negative' to ‘stable' and revised its national scale rating from ruAA+ to ruAAA.
"The rating actions reflect our view that NLMK's operating performance will likely stabilize this year, albeit at a lower level than in 2008," Standard & Poor's credit analyst Andrey Nikolaev said. "We factor into the rating the assumption that steel prices will remain at least at the levels of the second half of 2009 and that the company will be able to ensure high capacity utilization, owing to its low cost position."
The ratings reflect the agency's assessment of NLMK's business risk profile as ‘satisfactory' and its financial risk profile as ‘intermediate'. "NLMK's business risk profile benefits from a superior cost position, partial vertical integration, and the good diversity of export markets. NLMK's operating performance in 2009 was better than that of most its peers in Russia and the EU because it was already able to increase its capacity utilization to almost 100 percent in June 2009 and generated an EBITDA margin of 22.3 percent for the 12 months ended September 30, 2009," Standard & Poor's noted.
Standard & Poor's also assigned a BBB- priority unsecured debt rating to NLMK's BO-06 ruble bonds. The bonds issue volume is Ruble 10 billion.