Ukraine Markets Daily (January 31, 2018)

Market news

  • S&P upgraded Ferrexpo’s rating to ‘B’. The outlook is stable

Market comment

The UX index increased by 1.2% yesterday and the PFTS index was up by 0.2% (in UAH terms). The WIG-Ukraine index decreased by 0.1%. On the interbank exchange market, the UAH/USD was down by 1.0% to UAH 27.93 (mid price), according to Thomson Reuters. The official exchange rate reported by the NBU was UAH 28.25.


S&P upgraded Ferrexpo’s rating to ‘B’. The outlook is stable

S&P Global Ratings raised Ferrexpo’s long-term corporate credit rating to ‘B’ from ‘B-‘. The outlook is stable. Among main reasons for the rating upgrade are improved expectations for the iron ore pellet’s premiums for 2018 which in combination with favorable market conditions will result in healthy cash flow generation. Considering the fact that the Company’s entire sales are from exports all the cash generated is in hard currency, so Ferrexpo reducing its currency risks by holding its cash outside of Ukraine. Further rating upgrade is impossible until the improvement of Ukraine’s sovereign rating which is currently ‘B-‘.

Our view:

Following the recent rating upgrade made by Fitch a few weeks ago, rating increase made by another rating agency (S&P) confirms the fact of Ferrexpo’s solvency improvement resulted by its strong performance and positive financial results, which are expected to be better in 2018. Latest Debt to EBITDA ratio of 1.2, which is supposed to reduce after the partial Eurobond’s redemption upcoming in April 2018, indicates that the Company will not have any problems with repayment of its outstanding debt.


Although the information in this report has been obtained from sources which Empire State Capital Partners believes to be reliable and was collected in good faith, we do not represent or warrant its accuracy, except with respect to information concerning Empire State Capital Partners, its subsidiaries and affiliates, either expressly or implied, and such information may be incomplete or condensed. Nor has the information and/or data been independently verified, and so is provided without further caveat regarding its reliability, suitability for commerce or specific purpose. This report does not constitute a prospectus and is not intended to provide the sole basis for an evaluation of the securities discussed herein. All estimates and opinions included in this report constitute our judgment as of the date of the report and may be subject to change without notice. Empire State Capital Partners or its affiliates may, from time to time, have a position or make a market in the securities mentioned in this report, or in derivative instruments based thereon, may solicit, perform or have performed investment banking, or other services (including acting as advisor, manager) for any company referred to in this report and may, to the extent permitted by law, have used the information herein contained, or the research or analysis upon which it is based, before its publication. Empire State Capital Partners will not be responsible for the consequences of reliance upon any opinion or statement contained herein or for any omission. This report is confidential and is being submitted to select recipients only. It may not be reproduced (in whole or in part) without the prior written permission of Empire State Capital Partners. Any recommendations, opinions, forecasts, estimates or views herein constitute a judgment as at the date of this report. This document has been produced independently of Empire State Capital Partners and the recommendations, forecasts, opinions, estimates, expectations, and views contained herein are entirely those of the research analyst(s). While all reasonable care has been taken to ensure that the facts presented herein are accurate and that the respective recommendations, forecasts, opinions, estimates, expectations, and views are fair and well considered, none of the research analyst(s), Empire State Capital Partners or any of its directors, managers or employees has verified the contents of this document and, accordingly, no research analyst, Empire State Capital Partners or any of its respective directors, managers or employees shall be in any way responsible for its contents.

Kind regards

Research Team