Ukraine Markets Daily (January 18, 2018)

Market news

  • Ferrexpo’s rating was upgraded to ‘B’ from ‘B-‘ with positive outlook by Fitch

Market comment

The UX index decreased by 0.2% yesterday while the PFTS index remained unchanged. The WIG-Ukraine index increased by 0.8%. On the interbank exchange market, the USD/UAH was up by 0.2% to UAH 28.67 (mid price), according to Thomson Reuters. The official exchange rate reported by the NBU was UAH 28.65.


Ferrexpo’s rating was upgraded to ‘B’ from ‘B-‘ with positive outlook by Fitch

Fitch Ratings upgraded Ferrexpo’s Long-Term Issuer Rating (IDR) to ‘B’ from ‘B-‘ as well as the Company’s senior unsecured ratings. The Outlook on the IDR is Positive. The rating upgrade was mainly driven by the Company’s improved liquidity profile, as a result of the signing of a new pre-export financing (PXF) facility in November 2017. Ferrexpo’s high level of the cash balance is supported not only by the creditors, but by its profitability. The Company is able to generate a large amount of hard currency cash due to a low cost of the premium quality pellets production. Due to the fact that the company's operations were not affected by the conflict in the East of Ukraine, and also because the company's revenue is held outside Ukraine, which makes it invulnerable to the devaluation of the local currency, the newly received rating is one point higher than the sovereign ceiling.

Our view:

We think that Ferrexpo’s rating upgrade is reasonable, as it had not faced difficulties connected with servicing its debts, which are going to reduce after the redemption of the Company’s outstanding Eurobonds (USD 347 mn), which will be made in two equal installments in April 2018 and April 2019. According to Ferrexpo’s latest financial results, Company will not have any problems with the upcoming debt repayments.


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Kind regards

Research Team