Standard & Poor's: NLMK’s increased debt makes business vulnerable

UrBC, Moscow, April 27, 2011. The international rating agency confirmed the long-term credit rating of Novolipetsk Iron & Steel Works (NLMK), the Russian steel manufacturer, at BBB-. The rating was issued for the company’s ruble bonds (series 01) worth a total of 5bn RUR, the company’s 10bn RUR 05 Series bonds, and its 10bn RUR 06 Series bonds; NLMK was also rated at ruAAA as far as its national scale rating goes, with Stable rating outlook.

‘We would nevertheless like to mention that the company’s increased debt makes it more vulnerable to the industry’s potential decline. Worsening market conditions or further coal price growth could lead to demoted ratings for the company. The ratings could also go down in case the company takes no action to improve its liquidity and debt balance,’ the agency’s report says.

Standard & Poor's is not planning to raise NLMK’s rating in the next few years as long as the current conditions remain unchanged, as the company is still subject to great country risks related to doing business in Russia.

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