Fitch revises Evraz to positive

Fitch Ratings said it revised Evraz Group SA's outlook to positive from stable, and affirmed its long-term issuer default rating and senior unsecured rating at BB-.

The short-term issuer default rating was affirmed at B.

Fitch said the outlook revision reflects faster deleveraging than the agency expected in May 2017, made possible by a continued improvement in the steel and coking coal price environment as well as management focus on debt reduction.

“Fitch expects funds from operations (FFO) adjusted gross leverage below 3x at end-2017, down from 4.4x in 2016. Our base case forecasts a spike in leverage to 3.3x in 2018 due to expected correction in raw materials prices (iron ore, coking coal) following several quarters of recovery since 2H16,” the agency said in a news release.

“We expect the ratio to remain below 3x thereafter as positive free cash flow (FCF) supports continued gross debt reduction.”

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