Ferrexpo credit rating raised by Fitch to B+/Stable

Fitch raised the long-term issuer default rating of
iron ore miner and pellet maker Ferrexpo (FXPO LN, FXPOLN) to B+ from B with a
Stable outlook, the ratings agency reported on Dec. 14. The increase of the PXF
amount to USD 400 mln in August 2018 (USD 205 mln remain undrawn) constitutes a
pre-funding of a USD 173 mln Eurobond repayment Ferrexpo faces in April 2019,
Fitch noted.

The rating agency expects Ferrexpo’s prices to drop to
USD 79/t in 2020 from around USD 105/t in 2018 and USD 108/t in 2017.

Ferrexpo is now rated two notches above Ukraine’s
sovereign level, B-. Fitch’s previous action on Ferrexpo was a Jan. 17, 2018 rating hike to B
from B-.

Currently, Ferrexpo is rated at B/Stable by S&P
(one notch above sovereign) and at Caa1/Positive by Moody’s (one notch above
sovereign).

Dmytro Khoroshun: After
Ferrexpo repays its USD 173 mln Eurobond outstanding on Apr. 7, 2019, which
seems a certainty, the company will have no publicly traded debt. The company
underlined to investors recently that, in order to minimize its refinancing
risks, it intends to rely on amortizing bank credits rather than on bonds with
bullet maturities. Therefore, we think that the rating hike, although it
emphasizes Ferrexpo’s excellent credit, will not impact the markets much.

We retain our neutral view on FXPOLN Eurobonds.