MMK CREDIT RATING RAISED

[Steelonthenet.com] Magnitogorsk, Russia - Standard & Poors has raised the rating of the Magnitogorsk Iron and Steel Works JSC from BB- to BB thanks to the continuing improvement of the operating performance and the company's financial profile. The outlook for the rating is 'Stable'. The national scale rating has also been raised from ruAA- to ruAA.

'The improved ratings reflect the continual enhancement of the quality of the company's assets, operational efficiency, a significant reduction of the debt level, high liquidity and a high level of generated cash flows', said Tatiana Kordiukova, a S&P credit analyst.

Over the recent years MMK has been investing in the modernization of its production assets successfully transforming Russia's oldest steel mill into an enterprise with a significant competitive edge. Though the company, unlike its domestic rivals (but not the ones on the international market), is not vertically integrated with mining assets, it has been able to maintain the same level of operational margins as its vertically integrated peers. This attests to the high efficiency of the company's operations and its strong bargaining position in respect of certain suppliers. In the past the company experienced some irregularities in the supply of raw materials, but they were soon overcome not leaving any visible dent on the company's profitability.

S&P analysts believe that the financial condition of the company will enable it to weather any possible slump in steel prices without jeopardizing its creditworthiness.

SOURCE: Magnitogorsk Iron and Steel Works JSC

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