S&P Affirms GMK Noril'skiy nikel' OAO’s Ratings and Revises Outlook to Stable
Standard & Poor's Ratings Services (S&P) announced that it had revised its outlook on the Russian metals and mining group GMK Noril'skiy nikel' OAO (Norilsk) to stable from negative. It also affirmed the BBB- long-term corporate credit rating and the ruAA+ Russia national scale rating on Norilsk Nickel, and the BBB- issue rating on loan participation notes (LPNs) issued by an orphan Irish special-purpose vehicle, MMC Finance Ltd., for the sole purpose of providing a loan to Norilsk. The revision of the outlook to stable and the affirmation of the ratings reflect the recent track record of the group's key shareholders and the new management team. Since the signing of the shareholder agreement between Interros, RUSAL, and Millhouse nine months ago, S&P has observed the ability of the shareholders to agree on a new strategy and financial policy. In particular, S&P noted adoption of a new dividend policy to reduce dividends for 2014-2015 in view of a weaker market environment. The new policy implements a minimum dividend of $2 billion per year, compared with S&P’s initial proposal of $3 billion. S&P therefore expects the group's financial strategy will be more predictable. The risk of higher debt levels in 2016 still exists. However, in S&P view, this is mitigated by management's policy of net debt to EBITDA of 2x or below (including under prevailing weak industry conditions) and a continued modest adjusted debt-to-EBITDA ratio of 1.3x at end-June 2013.
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