Fitch rates Steel Funding notes BBB-

Fitch Ratings said it assigned an expected senior unsecured rating of BBB- to Steel Funding DAC's proposed loan participation notes.

This rating is in line with the current loan participation notes issued by Steel Funding DAC, which also are rated at BBB-, Fitch said.

The notes will be issued with limited recourse to Steel Funding and for the sole purpose of funding a loan to NLMK Group (Novolipetsk Steel), the agency said.

The noteholders will rely solely on Novolipetsk Steel's credit and financial standing for the payment of obligations under the notes, Fitch explained.

The notes rank pari passu with all other unsubordinated and unsecured indebtedness of Novolipetsk Steel, the agency said.

The proceeds will be used from the loan to fund a cash tender offer for the $500 million 4.95% loan participation notes due 2019 and the $800 million 4.45% notes due 2018, Fitch said, and to refinance existing indebtedness and general corporate purposes

The ratings continue to reflect its strong self-sufficiency in raw materials, low production costs, geographical diversification and conservative financial policy, Fitch said.

The company has continued reducing debt on the back of robust free cash flow, arriving at funds from operations adjusted net leverage of 0.7x in 2016, the agency said.

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