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

January 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 Positive outlook, the ratings agency reported on Jan. 17. Following the arrangement of the USD 195 mln PXF, Ferrexpo is expected to “be able to redeem its fairly large upcoming debt maturities in 2018 and 2019 from internally generated cash flows and available cash balances," Fitch reported.

The rating agency expects Ferrexpo’s EBITDA margin to have amounted to 45% in 2017, before dropping to 39% in 2018, 36% in 2019, and 24% in 2020 owing to swelling global pellet supplies and higher costs.

Ferrexpo is now rated one notch above Ukraine’s sovereign level, B-. Furthermore, Ukraine’s outlook is Stable, whereas Ferrexpo’s is Positive. The rating agency noted that “should Ferrexpo maintain a solid liquidity profile, its credit profile would be commensurate with a B+ rating."

Fitch’s previous action on Ferrexpo was a Feb. 27, 2017 ratings hike to B- from CCC. Currently, Ferrexpo is rated at B-/Positive by S&P (in line with sovereign) and at Caa1/Positive by Moody’s (one notch above sovereign).

Dmytro Khoroshun: We agree with Fitch that the two USD 173 mln Eurobond principal repayments on Apr. 7, 2018 and Apr. 7, 2019 seem very feasible for Ferrexpo. Unless the company does something drastic, like issue a new Eurobond, its credit profile should remain strong in the near term. We retain our neutral view on Ferrexpo Eurobonds.

Issue: Ferrexpo, 10.375% 7apr2019, USD

StatusCountry of riskRedemption (offer)VolumeEmission Rating (M/S&P/F)
outstandingUkraine04/07/201980,362,000 USDB/Caa1/B

Company: Ferrexpo

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

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