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Concorde Capital Research: Ferrexpo credit rating raised by Fitch to B+/Stable

December 18, 2018 | Cbonds

Fitch raised the long-term issuer default rating of iron ore miner and pellet maker Ferrexpo (FXPO LN, FXPOLN) to B+ from B with a Stable outlook, the ratings agency reported on Dec. 14. The increase of the PXF amount to USD 400 mln in August 2018 (USD 205 mln remain undrawn) constitutes a pre-funding of a USD 173 mln Eurobond repayment Ferrexpo faces in April 2019, Fitch noted.

The rating agency expects Ferrexpo’s prices to drop to USD 79/t in 2020 from around USD 105/t in 2018 and USD 108/t in 2017.

Ferrexpo is now rated two notches above Ukraine’s sovereign level, B-. Fitch’s previous action on Ferrexpo was a Jan. 17, 2018 rating hike to B from B-.

Currently, Ferrexpo is rated at B/Stable by S&P (one notch above sovereign) and at Caa1/Positive by Moody’s (one notch above sovereign).

Dmytro Khoroshun: After Ferrexpo repays its USD 173 mln Eurobond outstanding on Apr. 7, 2019, which seems a certainty, the company will have no publicly traded debt. The company underlined to investors recently that, in order to minimize its refinancing risks, it intends to rely on amortizing bank credits rather than on bonds with bullet maturities. Therefore, we think that the rating hike, although it emphasizes Ferrexpo’s excellent credit, will not impact the markets much.

We retain our neutral view on FXPOLN Eurobonds.

Issue: Ferrexpo, 10.375% 7apr2019, USD

StatusCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
redeemedUkraine04/07/2019160,724,000 USDWithdrawn/NR/NR

Company: Ferrexpo

Full company nameFerrexpo plc
Country of riskUkraine
Country of registrationUnited Kingdom
IndustryFerrous metals

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