Fitch rates Ukraine’s Metinvest bonds as «junk»

Ukraine’s largest steelmaker, Metinvest, has offered holders of its $500 million bond which was due to mature in May 2015 a longer-term bond to November 2017 with an increased interest rate of 10.5 percent per annum.
The steelmaker, which expects its results to be hurt in the second half after a pro-Russian separatist conflict in eastern Ukraine shut its main steel and coal assets, said it would repay 20 percent of the bonds in May next year as expected.
Fitch gave the planned note issue a CCC rating, which it gives to subprime extremely speculative instruments with high risk.
«The Issuer expects its EBITDA and operating cash flow in the second half of 2014 will decrease as compared to the first half of 2014 and may remain depressed or even decrease further in 2015,» Metinvest said in a filing with the London Stock Exchange on Tuesday.
Fitch said Metinvest, majority owned by Ukraine’s richest businessman Rinat Akhmetov, is highly exposed to geopolitical risks in Ukraine’s industrial heartland of Donbass and the risks of further operation disruptions.
Metinvest will lose several hundred million dollars of income in the second half of this year because of the separatist conflict, the company’s chief financial officer said in a Reuters interview.
Fitch’s full statement available at.

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