Moody's affirms Caa3 rating of Ukraine's Ferrexpo, upgrades outlook to stable

By bne IntelliNews October 13, 2016

Moody's rating agency on October 12 affirmed the Caa3 rating for senior unsecured notes issued by Ferrexpo, Ukraine's largest iron ore pellet exporter.

Moody's also changed the outlook on the rating to stable from negative, which was based primarily on the recent iron ore price recovery, as well as the company's reduced C1 cost in January-June to $25.7/mt from $31.9/mt in 2015. This effectively made Ferrexpo one of the lowest cost ore pellet producers globally, Moody's commented.

The change in outlook did not have any material effect on Ferrexpo bonds that now trade close to par value, the Concorde Capital brokerage in Kyiv said in a note on October 13.

"Ferrexpo's Caa3 rating equals the current Eurobond ratings of some other Ukrainian corporate names, as well as Ukraine's sovereign Eurobonds," Concorde analyst Igor Zholonkivskyi wrote. "We believe the downside risks for the [Ferrexpo] bond price are likely to persist in the mid-term perspective due to the continuing long-term trend of lower iron ore prices."
 

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