Moody's rates MMK debt Aa3.ru

Moody's Interfax Rating Agency said it assigned a Aa3.ru national scale debt rating to OAO Magnitogorsk Metallurgical Kombinat and Moody's Investors Service affirmed the company's existing global scale ratings, including the Ba3 corporate family rating and the Ba3 $300 million guaranteed medium-term notes issued by MMK Finance SA.

The ratings reflect the company's established position in the domestic steel market, which continues to be strong in 2005; its proven ability to source raw materials from a number of third-party suppliers and maintain stable production levels and the benefits realized from continuous capital investment, leading to increasing production efficiencies, the agency said.

In addition, the ratings take into account Moody's expectations regarding Russia's strong economic environment which is likely to continue to support domestic steel industry revenues through a period of price volatility in some export markets.

Moody's said the ratings also reflect the company's high level of earnings cyclicality, lack of vertical integration, lack of transparency, a heavy reliance on export revenues and its large capital requirements for modernization of the existing facilities, development of new mineral deposits and the financing of green-field projects under the recently acquired licenses.

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