Evraz Share News (EVR)

LONDON (Alliance News) - Moody's Investors Service late Thursday upgraded the debt ratings of Russia-focused steel maker Evraz Group SA on the back of its reduced leverage and total debt.

Moody's upgraded Evraz's corporate family rating to Ba1 from Ba2 and its probability of default rating to Ba1-PD from Ba2-PD.

Moreover, the senior unsecured rating assigned to Evraz's notes was upgraded to Ba2 from Ba3.

This note rating is one notch below the company's corporate family rating as the notes are subordinated to more senior obligations, particularly to unsecured borrowings from Evraz's operating companies.

Moody's said it had based its upgraded ratings on the expectation that Evraz will maintain its Moody's-adjusted total debt to earnings before interest, taxation, depreciation and amortization ratio below 2.5 times on a sustainable basis.

In addition, Moody's also expects that Evraz will continue to gradually reduce its total debt and will be able to create "sustainable positive post-dividend free cash flow", as well as sticking to its existing financial policy of tailoring dividends to both the market and its own capital expenditure.

Moody's further predicts that Evraz will maintain its "healthy liquidity" and conservative liquidity management.

"We have upgraded Evraz's ratings based on continuing reduction in its leverage and total debt, and our expectation that it will be able to keep leverage sustainably within our threshold for its Ba1 rating, will adhere to its balanced financial policy and maintain healthy liquidity," said Moody's Senior Credit Officer Artem Frolov.

Moody's said Evraz's outlook is stable, despite price volatility in its markets, with a "solid positioning within the current rating category".

Shares in Evraz were down 0.3% at 489.90 pence on Friday.