Fitch rates Steel Capital notes BB-

Fitch Ratings said it assigned Steel Capital SA's prospective $500 million of loan participation notes due 2016 an expected senior unsecured rating of BB-.

The sole purpose of issuing the notes is to finance a loan to OAO Severstal (BB-/stable) as a borrower. Noteholders are deemed to have accepted and agreed that they are relying solely on Severstal's credit standing in respect of the payment obligations of Steel Capital under the notes.

Severstal's core business benefits from high self sufficiency in iron ore and coking coal, which allows low-cost upstream operations, the agency said.

The cash cost of slab production at the Cherepovets steel mill is comparable with other integrated steel producers and is 40% lower than the global average, the agency added.

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