S&P Affirms MMK’s Rating at BBB- with Stable Outlook

12 December 2018 (10:39)

UrBC, Magnitogorsk, December 12, 2018. S&P Global Ratings Services (S&P) affirmed the long — and short-term IDR of Magnitogorsk Iron & Steel Works (MMK) at BBB-/A-3, with Stable rating outlook, MMK’s Information & PR Department reports.

The agency says in its press release that they took into account MMK’s low-cost production type, impressive operational efficiency, a considerable share of high value-added goods in the overall product range/sales structure, very low debt burden, and great liquidity.

According to S&P, further rating growth is currently restrained by Russia’s considerable country risks and the fact that the steelmaking industry is both highly cyclical and capital-intensive.

Stable rating outlook indicates that the agency believes MMK will keep generating free operating cash flow (FOCF) of about $1bn a year for the next two years, which will keep its debt/EBITDA ratio at below 1.5х and its FFO/debt ratio at more than 60%.

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