Ferrexpo discloses LIBOR+450 bps rate on recent loan

Ingrid McMahon, the head of investor relations at iron
ore miner Ferrexpo (FXPO LN, FXPOLN), disclosed in an interview published by
Interfax-Ukraine on Nov. 24 that the interest rate on the USD 195 mln loan the company recently arranged
is 450 bps plus LIBOR. The new loan conditions will lower the average interest
rate for Ferrexpo, she said.

Dmytro Khoroshun: The
interest rate for the new loan will certainly be lower than the 10.375% rate on
Ferrexpo’s Eurobonds. In the past, Ferrexpo enjoyed even lower rates on bank
loans, such as 325 bps + LIBOR on its 2013 PXF. But what this comparison
reveals is that Ferrexpo managed to minimize increases in rates despite all
that has happened since 2013 on the iron ore markets, in Ukraine politically,
and with Ferrexpo itself.

The disclosure of the 450 bps margin confirms that
the recently arranged loan was a good deal for Ferrexpo. Nevertheless, we
retain our neutral view on Ferrexpo bonds, seeing both upside and downside
risks to their price staying balanced.