Metinvest attracts EUR 34 mln ECA credit for CapEx at Ilyich

Ukraine’s largest steelmaker Metinvest (METINV) has
secured a EUR 34.4 mln credit facility backed by Austria’s export credit agency
(ECA), the company reported in a July 17 release. The facility will be used by
Ilyich Steel, Metinvest’s Ukrainian steelmaker, to finance the reconstruction
of its rolling mill 1700, will mature in August 2028, and will bear an interest
rate of 6M EURIBOR with an unspecified margin, Metinvest said, adding that the
lender will be ODDO BHF, a Franco-German financial services group.

The total investment during the current phase of the
mill 1700 reconstruction project is expected to reach USD 110 mln, the holding
reported. The project will expand the range of hot-rolled coil products the
mill is able to produce, improve the quality, reduce production costs and
increase the mill’s annual capacity to 2.5 mmt from 1.36 mmt, according to the
release.

Recall, in July 2018 Metinvest reported securing a seven-year, EUR 43.2 mln loan
from Raiffeisen Bank International AG also secured by Austria’s ECA for
reconstruction of continuous casting machine No. 4 at Ilyich Steel. Metinvest completed this project in March.
In June, Metinvest attracted a loan of an unspecified amount
backed by France’s ECA for the construction of an air-separation unit at Ilyich
Steel.

Dmytro Khoroshun: As we expected, Metinvest
continues to expand its ECA-backed loan portfolio, which we estimate has
reached about USD 125 mln after the attraction of the ODDO BHF loan. The total
of these longer-term, lower-interest loans might eventually reach 10% of
Metinvest’s debt, or about USD 250-300 mln.

We maintain our bullish view on METINV bonds.