Fitch: Russian metals, mining look strong

Fitch Ratings said that the Russian metals and mining companies can expect another favorable earnings season in 2007 following robust 2005 and 2006 financials, with strong credit metrics for their ratings.

"Their strong financial profile was underpinned by a favorable pricing environment in both domestic and international markets, a high degree of vertical integration among Russia's steel producers, an overall low cost production base, as well as successful cost cutting initiatives," Angelina Valavina, director of Fitch's industrials team, said in a written statement.

According to Fitch, the 2007 financial profile of Russia's metals and mining companies are spurred by strong domestic demand for steel driven by the country's construction and rapid gross domestic product growth.

The ratings for Russian metals and mining producers reflect high profitability, ample revenue and strong cash flow, the agency said.

In some cases, evolving corporate governance practices and the overall business environment in Russia may restrict the ratings, Fitch said.

Fitch affirms Serbia

Fitch Ratings said it affirmed the Republic of Serbia's foreign- and local-currency issuer default ratings at BB- with a stable outlook. The agency also affirmed the country ceiling at BB- and the short-term foreign-currency issuer default rating at B.

"There have been some notable improvements in Serbia's measures of sovereign creditworthiness, bringing them into line with BB medians," Paul Rawkins, senior director in Fitch's sovereign team, said in a written statement.

"Nonetheless, fiscal policy has become more expansionary over the past 12 months, exacerbating macroeconomic imbalances, while political risk mostly associated with the future status of Kosovo will remain uppermost in the near term," Rawkins said.

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