The stable rating reflects the efficient operation of MMK

Moody's affirms the corporate rating (CFR) of Magnitogorsk Iron and Steel Works at Ba3 and the probability of default (PDR) at Ba3-PD. The international rating agency has completed its rating downgrade, reflecting the deteriorating operating environment in Russia, and considers the rating outlook to be stable.

In the opinion of Moody's Investors Service, the stability of the rating was ensured by an increase in export supplies and a decrease in the share of borrowed funds achieved by MMK in 2014, which, combined with adequate liquidity, contributed to strong financial results and created a reserve in the Ba3 rating category of the company. This additional headroom will allow the company to comfortably withstand the heightened risks of weakening demand in the domestic end-use market in 2015.

Moody's believes that the Russian market will remain a key market for the company in 2015, despite an increase in the share of export sales in 2014 and a significant improvement in competitive positions in international markets due to the devaluation of the ruble. MMK's continued focus on Russia, despite recent fluctuations in the national currency, reflects the increasing attractiveness of domestic sales due to higher ruble prices in the Russian market since November 2014 and the strengthening of the ruble since March 2015.

At the same time, a difficult situation remains on the international steel markets associated with European prices for hot-rolled products. Prices fell by about 20-25 percent in 2014, making export sales less attractive. At the same time, a favorable range of products will ensure the company's high competitiveness outside Russia.