Fitch confirms rating of NLMK at the level “BBB-” with negative forecast

On May 13th, Fitch Ratings has affirmed the long term issuer default rating (IDR) of NLMK at the level of "BBB-". The rating forecast is “negative", the agency reports.

The ratings reflect strong vertical integration of NLMK, low production costs, a good range of products, geographic diversification and the quality of the corporate management at the level above the average for Russia. "Negative" forecast reflects the continued high leverage of the company, which doesn’t meet the Fitch’s guidelines of the current ratings levels.

At the end of 2013, the total debt rose to $5.1 billion from $4.9 billion at the end of 2012. Cash and cash equivalents increased to $1.5 billion at the end of 2013 from $1.1 billion at the end of 2012 . In 2013, the adjusted gross leverage on cash from operations (FFO) grew to 4.11x (3.03x in 2012). However, Fitch expects that the adjusted gross leverage on FFO will decrease to 2.68x by the end of 2014 by generating positive free cash flow due to more conservative investment program (as compared with previous years).

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