Fitch affirms ‘C’ rating on Metinvest notes

Fitch Ratings has affirmed its ‘C’/Recovery Rating ‘RR6’ on Metinvest’s Eurobonds (METINV), according to the agency’s April 8 press release. It also affirmed its  long-term issuer default rating for Metinvest at ‘RD’ (Restricted Default). In its assessment, Fitch referred to its talks with Metinvest’s management, saying that while “the broad parameters of a restructuring plan have been agreed upon with creditors, there is no certainty that an agreement will be finalized by the expiry date of the current agreement.”

The standstill with bondholders, currently in force, expires on May 27. Fitch reported a rising “possibility of an extension to the current agreement.”  It will review Metinvest’s ratings should financial restructuring be successfully completed, Fitch said.

Roman Topolyuk: Metinvest’s earnings power has significantly recovered in March-April, we estimate, following a steep rebound in steel prices after the company generated negative EBITDA in November-January amid commodity prices reaching decade lows. Commodity price recovery increases the chances for restructuring to occur by the deadline, in our view. Meanwhile, we understand that holdouts among banks, or certain formalities, may cause restructuring talks to get protracted for some additional period of time. We maintain our bullish view on Metinvest’s notes.