Ferrexpo credit rating affirmed at BB- by Fitch

Fitch announced on Sept. 2 that it had affirmed the
long-term issuer default rating of iron ore miner and pellet maker Ferrexpo
(FXPO LN) at BB-/Stable.

Fitch said that the affirmation reflected Ferrexpo’s robust
business profile linked to high iron ore prices supported by steady demand from
China. The rating action also considers Ferrexpo’s conservative financial
profile and flexibility in capital expenditure and dividend payouts, according
to Fitch’s report. However, Fitch also noted limitations in company-specific
corporate governance practices.

Fitch forecasts Ferrexpo’s 2020 EBITDA at USD 553 mln,
and assumes CapEx of USD 235-240 mln in 2020 falling to USD 150 mln in 2021 and
USD 100 mln in subsequent years. The agency assumes dividends of around USD 193
mln in 2020 falling to, on average, USD 60 mln per year from 2021.

Ferrexpo is currently rated by Fitch two notches above
Ukraine’s sovereign level. Fitch’s previous action on Ferrexpo was a Dec. 12, 2019 upgradeof its credit rating to the current BB-/Stable from B+/Stable. Currently,
Ferrexpo is also rated at B-/Negative by S&P(one notch below sovereign) and B2/Negative by Moody’s(one notch above sovereign).

Dmytro Khoroshun: We agree
that Ferrexpo’s financial profile should remain conservative unless the company
begins expanding its capacity to 20 mmt per year from the current 12 mmt per
year (Fitch’ assumptions on CapEx do not account for such expansion moves).