Ferrexpo credit rating raised to BB- by Fitch

Fitch announced on Dec. 12 it has raised the long-term
issuer default rating of iron ore miner and pellet maker Ferrexpo (FXPO LN) to
BB-/Stable from B+/Stable. The main rationale for the outlook upgrade was the
change of the agency’s rating of Ukraine to B from B- on
Sept. 6.

Fitch said that Ferrexpo’s business and financial
profile are within the agency’s ‘BB’ category, but that the company’s credit quality
is constrained by several factors. Among these constraints are the operating
environment in Ukraine, as well as weak scores for governance structure, group
structure and financial transparency.

Ferrexpo is currently rated by Fitch two notches above
Ukraine’s sovereign level, B. Fitch’s previous action on Ferrexpo was a Dec.
14, 2018 upgrade of its credit rating to B+/Stable
from B/Positive. Currently, Ferrexpo is also rated at B/Negative by S&P (one notch
above sovereign) and B3/Positive by Moody’s (one notch
above sovereign).

Dmytro Khoroshun: If Fitch
raises Ukraine’s rating again in the near future (which is possible considering
the agency’s Positive outlook), Ferrexpo might not get an automatic upgrade
unless there is more visibility regarding the fate of its majority owner and former CEO Kostyantyn Zhevago.