Metinvest new Eurobonds rated B by Fitch

The newly issued Eurobonds of Ukraine’s largest
steelmaker Metinvest (METINV’23 and METINV’26) gained a B rating from Fitch,
the ratings agency reported on Apr. 24 following the completion of the restructuring and refinancing deal.

Metinvest’s operational profile is consistent with a
BB category rating, but the ratings are constrained by the operating
environment in Ukraine, Fitch said. The ratings agency also reported that the
additional liquidity from the deal, net of all fees, amounts to USD 90 mln.

Fitch relied on iron ore (presumably the benchmark 62%
fines) price forecasts of USD 55/t for 2018-2019 and USD 50/t thereafter.
Metinvest’s average 2018-2020 EBITDA margin after Fitch adjustments will amount
to an average 15% (2017: 20%), the agency reported.

Metinvest’s issuer default rating is B/Positive
according to Fitch (the rating was raised from RD on Apr. 6, 2017),
one notch above Ukraine’s sovereign issuer level, B-/Stable. Metinvest’s two
other long-term
credit ratings are from S&P – B-/Stable (which was initiated on Jan. 12, 2018
and which is the same as Ukraine’s), and from Moody’s – Caa1/Positive (which was
raised from Caa2/Stable on Aug. 29, 2017
and which is one notch above Ukraine’s).

Dmytro Khoroshun: We are currently expecting Metinvest’s 2018 profitability to at least
remain in line with 2017 levels due to the markets remaining strong, and we
view Fitch’s forecast of a decrease in EBITDA margin during 2018-2020 as
justifiably conservative. On the basis of the net additional liquidity value
reported by Fitch, USD 90 mln, we estimate that the total amount of the fees Metinvest paid to PXF lenders
and advisers
amounted to USD 40 mln, approximately.