Fitch Ratings revised the forecast for the rating of NLMK from stable to negative

The Fitch Ratings International rating agency revised the forecast for the long -term rating of the issuer default (RDE) OJSC Novolipetsk Metallurgical Plant (NLMK) from the "stable" to "Negative". The agency reported this in a press release published yesterday.

In addition, Fitch Ratings confirmed NLMK ratings at the BBB- level, as well as Evraz Group Sa (Evraz Group) and Evraz PLC (Evraz) level at the BB- Evraz.

“A revision of the NLMK ratings on“ negative ”is due to an increase in the levere (the ratio between the cost of borrowed and equity -ed.) In 2012 to the financial year to the level, above the expectations of the agency. The indicators of Evraz Group and Evraz for 2012 the financial year corresponded to Fitch's expectations, ”the report said.

The Fitch Ratings will be able to change the forecast from the “negative” to the “stable” for NLMK, subject to the reduction of the expected gross leftist to a two -time level by the end of 2015.

In addition, the agency reported that increasing the ratings of the mentioned metallurgical companies in Russia is not considered as a probability over the next two to three years. Fitch analysts believe that during this period the prices for steel products will remain below the level of 2012, although there will be some price restoration from year to year.

The margin of companies as a whole will remain under pressure, but Fitch expects that EBITDAR margins in each of these issuers will exceed 10-12 percent of the next three years, which looks favorable for other metallurgical companies in the world.

Russian metallurgical companies will continue to gain advantages due to low costs for the production of steel semi -finished products and relatively high power loading coefficients at their production sites.