Fitch downgrades Interpipe bonds to CCC from B-

Fitch Ratings downgraded Interpipe’s USD 200 mln Eurobonds to CCC from B-, the ratings agency announced on September 16. Fitch referred to two main factors influencing the operating performance and solvency of Interpipe – current restriction of Ukrainian exports to the Customs Union and an ongoing anti-dumping investigation in the U.S. of pipes from Ukraine and eight other countries.

Roman Topolyuk: The downgrade was issued following a likely decline in sales that started in July, when Moscow imposed import restrictions on Interpipe products. Company officials are currently negotiating with Customs Union officials to reintroduce a special trade regime that would dampen existing duties of 18.9-37.8%, which make sales unprofitable for Interpipe. That’s being done as part of a review of the existing trade regime in pipes between Ukraine and the Customs Union that was initiated by Interpipe.

However, these negotiations are likely to extend to April 2014, which is the final date for a decision to be made, according to this review. In the meantime, Fitch’s ratings downgrade will further deteriorate the refinancing capabilities of Interpipe, which faces a scheduled repayment of USD 106 mln in November and USD 307 mln in 2014.