UrBC, Yekaterinburg, July 18, 2017. Fitch Ratings upgraded Magnitogorsk Iron & Steel Works’ (MMK) long-term issuer default rating from BBB- to BB+, with Stable rating outlook, MMK press service reports.

‘The agency says in its press release that this upgrade has to do with the company’s considerably decreased leverage and Fitch’s expectations for MMK’s financial policy to remain as conservative as before. The prospective leverage is expected to stay within the new rating range in the foreseeable future. The decline was brought about by MMK’s impressive financial performance and money that flew in from the sale of its share in Fortescue Metals Group (FMG) last year. Fitch Ratings also report that the plant is investing in no large-scale projects at the moment, so its CAPEX is estimated at around $600m a year and will most likely be directed to maintenance and projects to improve the plant’s operating performance,’ the press service says.

MMK’s rating is believed to reflect the plant’s strong position on the Russian market (the company sells 70% to 75% of its goods at home); the company is seen as a reliable supplier of high value-added steel goods. Fitch expects the demand for Russian steel to gradually recover at 1.5% to 2% a year in the medium term, which should enable the plant to manage its loan book as before.