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Global Credit Research - 19 Oct 2010
Moscow, October 19, 2010 -- Moody's Investors Service has today assigned a Ba3 rating to a first take-down
under the Medium Term Notes Program ("MTN Program") totaling USD 1 billion
for the Issuance of Loan Participation Notes maturing in 2017 issued by
Steel Capital S.A. for the purpose of financing loans to
The Ba3 rating assigned to the first drawdown is in line with Severstal's
corporate family rating of Ba3 reflecting the intended purpose and structure
of the LPN.
The proceeds from the issue will be on-lent by Steel Capital to
Severstal, thus the Noteholders will be relying solely on Severstal's
credit quality to repay the debt.
The Ba3 rating and LGD-4 or 56% reflects the following facts:
i) the Notes will be denominated in USD; ii) the rating reflects
the senior unsecured position of the Notes and their pari passu ranking
with all other unsecured and unsubordinated financial indebtedness of
Severstal, iii) the Notes proceeds will be on-lent to Severstal
and will be used for general corporate purposes (unless otherwise specified
in the relevant Loan Agreement). Therefore Noteholders are relying
solely on the latter's creditworthiness to service and repay the debt.
The last rating action was on October 7, when assigned a (P) Ba3
rating to a USD 3.0 billion Medium Term Notes ("MTN Program") for
the Issuance of Loan Participation Notes to be issued by Steel Capital
S.A. for the purpose of financing loans to OAO Severstal.
The principal methodology used in rating Severstal was Global Steel Industry
rating methodology published in January 2009. Other methodologies
and factors that may have been considered in the process of rating this
issuer can also be found on Moody's website.
In 2009, Severstal produced 16.7 million metric tons (mt)
of crude steel, down from 19.2 million mt in 2008.
The group reported revenues of US$13.1 billion (representing
a 41% decrease year-on-year (Y-o-Y))
and US$844 million in EBITDA (84% decrease Y-o-Y).
Severstal posted a net loss of US$1.04 billion (fiscal year
(FY) 2008: net profit of $2.03 billion). In
1H 2010 the company reported USD 7.4 billion in revenue (54%
increase H-o-H) and EBITDA of USD 1.4 billion up
from negative -- USD 30 million in 1H 2009.
OAO Severstal is one of the largest steel producer in Russia, with
other major subsidiaries in the US. Severstal's key operating assets
are located in more than 30 different locations around the globe.
The group also owns substantial mining assets in Russia and has mining
activities in the US and Western Africa. Severstal is listed on
RTS and LSE and is directly and indirectly controlled by CEO Mr.
Alexey Mordashov, who owns a 82.37% stake in the group.
Vice President - Senior Analyst
Corporate Finance Group
Moody's Eastern Europe LLC
Telephone: +7 495 228 6060
Facsimile: +7 495 228 6091
Eric de Bodard
MD - Corporate Finance
Corporate Finance Group
Moody's France SAS
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's Eastern Europe LLC
Moody's assigns Ba3 rating to Severstal USD 1 billion first take-down under the MTN program
7th floor, Four Winds Plaza
21 1st Tverskaya-Yamskaya St.
No Related Data.
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