S&P reduces Evraz Groupís rating

Standard & Poorís decreased Evraz Groupís rating from B+ down to B, with Stable Rating Outlook.
ĎThe decrease in ratings is a sign that the agency believes Evraz to be entering a period of operational weakness for the next couple of years due to the steel industryís dramatic downfall,í says the agencyís credit analyst Alex Herbert. S&P expects the company to remain heavily in debt (stemming from some earlier acquisitions) and to have limited cash generation.

The agency feels Evraz Groupís profits and cash flow will gradually restore as the steel market slowly comes back to life. However, the global economy is still far from stable growth, so itís difficult to predict the future sales and prices of steel.

S&P believes Evrazís rating can be further reduced by shot-term debt refinancing problems or limited financial covenant opportunities. On the other hand, the ratings could go up if the company managed to solve its liquidity problems and to improve its lending parameters.

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