Ukraine Markets Daily (November 17, 2017)

Market news

  • Ferrexpo entered a new credit facility of USD 195 mn
  • Metinvest will almost double its own railcar park

Market comment

The UX index increased by 0.6% yesterday and the PFTS index was up by 0.1% (in UAH terms). The WIG-Ukraine index increased by 1.9%. On the interbank exchange market, the USD/UAH remained almost unchanged at UAH 26.47 (mid price), according to Thomson Reuters. The official exchange rate reported by the NBU was UAH 26.48

 

Ferrexpo entered a new credit facility of USD 195 mn

According to the announcement made by Ferrexpo on November 17, 2017, the Company signed a new secured three-year revolving credit facility of USD 195 mn, which will be amortized over eight quarters with final repayment on 31 December 2020. The Facility was arranged by BNP Paribas and includes a syndicate of six international lenders.

Our view:

We think that in fact, the new Facility is a kind of refinancing of the Company’s debts which is needed for the Company to smooth down the negative influence of significant, more than USD 500 mn Eurobonds repayments upcoming in April 2019 on Ferrexpo’s operations. Considering the Facility amortization terms it will shift the pressure of the one-time payment to the two-year period, reducing the Company’s debt portfolio cost and increasing its maturity.

 

Metinvest will almost double its own railcar park

Metinvest plans to purchase 1,800 railcars during 2017-2018, extending its own park to 4,000 of wagons. According to the plan, 800 railcars will be supplied by the end of 2017, while the rest – during the first half of 2018. This decision is driven by the need to reduce the negative influence of the railcar deficit in Ukraine. The Company needs around 18,500 railcars to deliver raw materials and dispatch their finished products. With the purchase of new railcars Metinvest will increase its self-sufficiency in railcars by almost 10%.

Our view:

We think that this decision is fully justified and with no doubt will have a positive influence on the Company’s operations. Metal producers face the situation with the railcars deficit since a lot of them were lost after the Donbas occupation, so the extension of own railcars fleet will provide the Company with extra flexibility during the periods of increased demand on its products.

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Kind regards

Research Team

EMPIRE STATE CAPITAL PARTNERS