Moody's eyes Chelyabinsk Pipe for cut

Moody's Investors Service said it placed Chelyabinsk Pipe Plant PJSC's ba3 corporate family rating and Ba3 rating of the loan participation notes issued by Chelpipe Finance DAC to finance a loan to ChelPipe, on review for downgrade.

The review follows PAO TMK reporting it will acquire 86.54% of shares in ChelPipe in a debt-financed transaction, Moody’s said. TMK will pay RUB 84.2 billion for the acquired stake using cash on its balance sheet and acquisition financing, valuing 100% of ChelPipe's equity at more than RUB 97 billion.

"The potential ownership by TMK is a negative for ChelPipe's bondholders, given TMK's weaker credit profile taking into account growing TMK's net leverage as a result of this transaction," stated Denis Perevezentsev, a Moody's vice president and senior credit officer, in a press release.

"However, the acquisition will allow solidifying TMK's position in high value-added OCTG market, augmented by ChelPipe's industrial pipes offering, leading to a material strengthening of the combined entities' scale, competitive position and their share in the Russian pipes market," he added.

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