On December 10 rating agency S&P Global Ratings assigned the PJSC Magnitogorsk Iron & Steel Works’ (MMK) “BBB-/A-3” long- and short-term issuer credit ratings with Stable Outlook.
In a press release S&P notes that its assessment of MMK’s creditworthiness incorporates MMK’s low-cost production profile, strong operating efficiency, significant share of high value-added products in sales, minimal leverage, and strong liquidity.
According to S&P only high country risk in Russia and the inherent cyclicality and capital intensity of the steel industry are the main constraining factors for the rating.
The stable outlook reflects S&P’s view that MMK will have strong positive free operating cash flow generation of about $1 billion in each of the next two years, underpinning strong credit metrics of debt to EBITDA below 1.5x and funds from operations to debt over 60%. (MMK/Ukrainian metal)