Ferrexpo repays last chunk of USD 420 mln PXF facility

Ukraine’s largest iron ore pellet exporter Ferrexpo (FXPOLN, FXPO LN) announced on Aug. 1 that it has repaid the last scheduled installment on its USD 420 mln pre-export facility, which amortized during the past 24 months. In a press release, Ferrexpo CFO Chris Mawe said the company’s strong cash flow generation helped to repay the loan in full and it remains committed to meeting all of its debt repayment obligations.

Roman Topolyuk: As Ferrexpo has been able recently to repay monthly principal of around USD 17 mln per month on the USD 420 mln PXF facility, we think it will also be able to repay quarterly installments of USD 44 mln (or around USD 15 mln per month) on another PXF loan, USD 350 mln, with amortizations starting in November. With iron ore spot prices currently at USD 62/t, we believe the company won’t need a maturity extension on its banking debt or Eurobonds. Therefore, Ferrexpo’s Eurobonds maturing in 2019 look attractive, having a spread to sovereign of 840 bps. Meanwhile, the name is exposed to a risk of a sharp slowdown in the Chinese economy, which may result in a decline in global iron ore prices.