Metinvest attracts ECA credit for CapEx at Ilyich Steel

tinvest (METINV), Ukraine’s largest steel producer,
attracted an export credit agency (ECA) loan for construction of an
air-separation unit (ASU) at Ilyich Steel, according to Metinvest’s June 15 press
release. The ASU equipment will be provided by Air Liquide (France), and the
construction, to be finished by the end of 2021, will be performed by
Metinvest’s own personnel, the company said, adding that the project’s total
cost will amount to USD 78.3 mln. Metinvest said that the new ASU unit will
supply oxygen to Ilyich Steel’s blast furnaces and will result in energy
savings of 20%. Ukraine’s President Zelensky attended the signing of
Metinvest’s contract with Air Liquide.

The ECA loan will involve France’s export credit
agency, Bpifrance Assurance Export, according to Metinvest. The amount of the
ECA financing was not specified by Metinvest.

Dmytro Khoroshun: Zelensky’s
press service in a June 15 release mentioned a USD 25 mln figure which, we think,
could be the amount of the ECA loan. The attraction of the ECA loan is positive
because its interest rate should be relatively low and the redemption schedule
should be extended (amortized, with the last installment likely at least in
five years, we think). However, the details of the ECA loan, including its
amount and currency (which might be the euro for exports from France) remain to
be disclosed.

In the long term, we believe Metinvest aims to raise
the share of ECA loans to at least 10% of its credit portfolio, or to about USD
250-300 mln (from the present USD 60 mln). The success in gaining the Bpifrance
Assurance Export loan is a positive step towards this goal.

Metinvest’s continuing investments are also
positive, provided there are no cost overruns, such as what was experienced
recently with Azovstal’s blast furnace No. 3.

We maintain our bullish view on METINV bonds.