Moody’s raises Metinvest rating to B2, lowers outlook to Stable

Moody’s announced on June 16 it has raised the
corporate family rating of Ukraine’s largest steelmaker Metinvest (METINV) to
B2 from B3, while lowering its outlook to Stable from Positive.

The decision follows Moody’s upgrade of Ukraine’s sovereign rating on June 12,
the agency said, adding that Metinvest’s business profile and financial metrics
are fairly strong for a B2 rating.

Metinvest is currently rated by Moody’s one notch
above Ukraine’s sovereign level of B3. Moody’s previous action on Metinvest was
a Nov. 26, 2019 outlook revision to Positive from Stable.
Metinvest’s two other long-term credit ratings are: from Fitch, BB-/Stable, two notches
above Ukraine’s sovereign; and from S&P, B/CreditWatch negative,
in line with Ukraine’s sovereign.

Dmytro Khoroshun: When Moody’s
raised its outlook on Ukraine and Metinvest to Positive in November, we assumed
that an upgrade of Metinvest’s rating will be automatic if Ukraine’s rating is
raised. However, because steel prices experienced periods of weakness in 4Q19
and 2Q20, Metinvest’s ratings cannot – in the short term – be assumed to always
be in line or above Ukraine’s, as evident from S&P putting Metinvest’s
rating on CreditWatch negative on March 31. Therefore, this recent Moody’s
upgrade of Metinvest’s rating is significant and a positive event.