14:34 23.07.2020

S&P affirms 'B' rating for Metinvest, outlook stable

2 min read
S&P affirms 'B' rating for Metinvest, outlook stable

Standard & Poor's Global Ratings (S&P) has affirmed its 'B' long-term issuer credit rating on the Metinvest mining and smelting group (Metinvest B.V. – the Netherlands) and changed the outlook from negative to stable.

According to the agency's press release, it affirmed its 'B' rating on Metinvest after revising upward its base case following encouraging performance in the first half of the year. Compared with its previous review, the agency is no longer concerned that the company would breach its financial covenants.

"With the trough behind us and early signs of recovery in the demand for steel in Europe, we now forecast EBITDA of $1.4 billion-$1.7 billion in 2020 (excluding about $170 million contribution from joint ventures), compared with the $1.1 billion-$1.3 billion we assumed when placing the rating on CreditWatch with negative implication at the end of March," the agency said.

According to the press release, "performance in the first half of 2020 was not much affected by the COVID-19 pandemic, and as we start the second half, we expect that the trough is behind us. Under our base case, we assume that the company would report EBITDA of about $700 million for the first half of 2020 (excluding joint ventures), taking into account reported EBITDA of $329 million (or $373 million including joint ventures) in the first quarter of 2020. The relatively strong results stem from the mining division, as iron ore prices continued to trade close to $90/tonne.

In addition, the company also performed better than expected in the steel division, the agency said.

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