It is planned to issue 300 dollars' worth of bonds with a period of repayment of at least seven years. The forecast rating is "stable". Simultaneously, the agency gave the company the short-term rating B. The final rating for bonds is due upon receipt of documents proving the earlier information, the communique says.
Fitch Rating noted that the resources attracted as a result of the issue will go to broaden Severstal's main activities in line with its strategy, as well as to refinance the company's current debt and unassociated financing. Severstal is Russia's second largest integrated metallurgical company with production capacities located in one place - the city of Cherepovets in the Vologda region 350 kilometers north of Moscow.
The ratings reflect the company's strong positions in the domestic market segments showing a high growth such as the manufacture of pipes and automobiles, the agency says. These two segments account for 21 and 16 percent, respectively, of the total sales volume of the metallurgical plant. In the last two years, joint ventures with Arcelor and Eurasholding were set up to expand the range of products for the Russian automaking industry and Gazprom.
The rating also reflects the agency's concern over Severstal's operations with affiliated companies which may be involved in the structure of Severstal property. Such deals may unfavourably affect the company's financial status owing to their size and frequency. In addition, the company lacks direct control over primary materials supplies. They are under control of Severstal's main shareholder Alexei Mordashov, who owns 82.75 percent of the company, the communique specifies.
