| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers A > Headlines for Alrosa Co. Ltd. > News item |
Fitch upgrades Alrosa
Fitch Ratings said it upgraded OJSC Alrosa's long-term issuer default rating and senior unsecured rating to BB from BB-.
The outlook is stable.
The company's short-term issuer default rating is affirmed at B.
The upgrade reflects expectations that Alrosa will de-leverage using proceeds from the sale of its gas assets to OJSC OC Rosneft, Fitch said.
The assets will be sold for $1.38 billion in cash, the agency said.
Alrosa plans to use the sale proceeds to repay short-term borrowings with an estimated reduction in funds-from-operations adjusted gross leverage to 2x by the end of 2013 from 2.4x at the end of 2012, Fitch said.
The proceeds also will contribute to an improvement in the company's liquidity position, the agency said.
Fitch said it assesses Alrosa's linkages with its controlling shareholder, the Russian Federation, as firm, which provides a one-notch uplift to the company's standalone rating of BB-.
State support during 2008 to 2009 included the purchase of diamonds via the Russian State Depository for Precious Metals and Stones, plus financing provided via state-owned Bank VTB, the agency said.
The planned sale of a 16% stake in the fourth quarter of 2013 through a public offering will be neutral on the company's ratings as the Russian Federation and the Republic of Sakha will remain joint controlling shareholders of the company, Fitch added.
Like other mining companies in Russia, Alrosa faces higher mining cost inflation than general inflation. An expected increase in the proportion of underground mining also will negatively affect average cash mining costs, the agency said.
The company's lack of product diversification and its exposure to the cyclical diamond market also are rating constraints, Fitch said.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.