UrBC, Chelyabinsk, December 24, 2015. The international rating agency Moody’s promoted Magnitogorsk Iron & Steel Works (MMK) from Ba3 to Ba2 and upped its PDR from Ba3-PD to Ba2-PD, with Positive rating outlook.

This upgrade was first and foremost due to a considerable improvement in the company’s financial performance over the last two years and a decrease of the overall debt burden (debt/EBITDA ratio) down to 1.8x in late 2014 and down to 1.2x by the end of September 2015, which is the point at which Moody’s upgrades ratings of companies in the below 2.5x range. Despite the expected drop in domestic demand for steel as well as that in the international and national steel prices next year, Moody’s nevertheless believes MMK’s performance indicators will still look good thanks to the company’s strong business profile, impressive cash generation, and conservative financial policy.

The agency’s press release states MMK’s conservative financial policy means the company keeps working to reduce its debt and uses a level-headed approach to capital investment management. MMK’s debt dropped from around $2.6bn in late 2014 to below $2.1bn in September 2015 due to ongoing cash generation. MMK intends to pay off (and not to get restructured) the portion of debt with deadlines in 2016 in order to keep the remaining sum at the level of around $1bn throughout next year.