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Concorde Capital Research: Fitch raises Metinvest rating to B+

April 11, 2019 | Cbonds

The long-term issuer default rating of Ukraine's largest steelmaker Metinvest (METINV) was upgraded by Fitch to B+/Stable from B/Positive on Apr. 10. The agency cited Metinvest’s commitment to prioritize CapEx, debt repayment and working capital funding over dividends as a reason for the upgrade. Fitch expects Metinvest to generate annually FCF before dividends of not less than USD 500 mln for the next few years.

Fitch’s rating of Metinvest is now two notches above Ukraine’s sovereign rating. Metinvest’s two other long-term credit ratings are from S&P: B-/Positive, which is the same as Ukraine’s sovereign, and the outlook on which was upgraded on Jan. 29. The second is from Moody’s: a B3/Stable grade, which was raised from Caa1 on Dec. 27, 2018 and which is one notch above Ukraine’s sovereign.

Dmytro Khoroshun: The upgrade is justified by Metinvest’s strong business, and we expect S&P to raise Metinvest’s rating to B this year. We also think that once it becomes clear that Metinvest has resumed returning money to its shareholders, with USD 540 mln returned in 2018, the holding’s standing with the markets and the rating agencies will not deteriorate. This is because, as Fitch notes, Metinvest is able to generate substantial free cash flows and thus can afford dividends of up to USD 500 mln per year.

Issue: Metinvest, 8.5% 23apr2026, USD

StatusCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
outstandingUkraine04/23/2026647,661,000 USD-/B/BB-

Company: Metinvest

Full company nameMetinvest B.V.
Country of riskUkraine
Country of registrationNetherlands
IndustryFerrous metals

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