Moody's affirms Ferrexpo Caa3 rating, upgrades outlook to stable

Moody’s affirmed on Oct. 12 the Caa3 rating for senior unsecured notes issued by Ferrexpo (FXPOLN, FXPO LN), Ukraine’s largest iron ore pellet exporter. Moody’s  also changed the outlook on the rating to stable from negative, which was based primarily on the recent iron ore price recovery, as well as the company’s reduced C1 cost in 1H16 to USD 25.7/mt from USD 31.9/mt in 2015. This effectively made Ferrexpo one of the lowest cost ore pellet producers globally, Moody’s commented.

Igor Zholonkivskyi: The change in outlook did not have any material effect on FXPOLN bonds that now trade close to par value. Ferrexpo’s Caa3 rating equals the current Eurobond ratings of some other Ukrainian corporate names, as well as Ukraine’s sovereign Eurobonds. We believe the downside risks for the FXPOLN bond price are likely to persist in the mid-term perspective due to the continuinglong-term trend of lower iron ore prices.