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Fitch Ups MMK’s Rating to BBB

UrBC, Magnitogorsk, April 10, 2019. Magnitogorsk Iron & Steel Works (MMK) reports its long-term IDR got brought from BBB- to BBB by Fitch Ratings on April 8, 2019, with Stable rating outlook.

‘The agency’s press release says the rating improvement is meant to stress the company’s ability to maintain a conservative financial profile despite the market turbulence (thanks to low production costs, a focus on high value-added produce, the leading position on the Russian steel market, and impressive profit margins throughout the entire economic cycle),’ MMK’s Information & PR Department states.

Fitch Ratings also confirmed MMK’s leverage is among the lowest for the steelmaking companies all over the world. Once the plant paid off most of its debt in 2015 and 2016, MMK’s net debt has remained at close to zero, and the company intends to keep it this way.

MMK’s rating is now higher than Russia’s long-term issuer default rating (BBB-, with Positive rating outlook), which is in line with the rating agency’s policy of rating non-finance sector businesses higher than the country’s best rating; MMK’s current rating is also based on the efficient servicing of foreign debt in convertible currency (thanks to impressive operational cash flow stemming from exports and the company’s foreign assets and thanks to overall low leverage).
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