17th Jun 2020 14:37
(Alliance News) - Moody's Investors Service on Wednesday changed the outlook of London-based steelmaker Evraz PLC to stable from positive.
Concurrently, Moody's affirmed Evraz's Ba1 corporate family rating, Ba1-PD probability of default rating and the Ba2 senior unsecured ratings of the notes issued by Evraz.
Change of Evraz's outlook to stable and affirmation of its ratings primarily reflect Moody's view that the company's leverage will remain elevated in 2020, it explained.
The ratings agency said the rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The steel sector has been one of the sectors most significantly affected by the shock given its sensitivity to demand and sentiment.
The stable outlook reflects Moody's expectation that deterioration in Evraz' credit metrics will be temporary, and the company will be able to restore its credit metrics over a 18 to 24-month period after the coronavirus.
Turning to ratings, Moody's said Evraz's Ba1 rating factors in its ability to generate positive post-dividend free cash flow despite challenging market environment, its high self-sufficiency in iron ore and coking coal, its product, operational and geographical diversification.
Evraz's rating also takes into account contraction of demand for steel in 2020 in all of Evraz's key regions of presence including Russia and the US.
The Ba2 ratings of Evraz's senior unsecured notes reflects Moody's view that the notes are structurally subordinated to more senior obligations of the Evraz group, primarily to unsecured borrowings at the level of the group's operating companies.
Evraz shares were trading 1.6% higher in London on Wednesday at 300.30 pence each.
By Evelina Grecenko; [email protected]
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