Fitch lowers Uralkali view to negative

Fitch Ratings said it revised the outlook on PJSC Uralkali's long-term issuer default rating to negative from stable and affirmed the issuer default rating at BB-.

Fitch also said it affirmed the foreign-currency senior unsecured rating on Uralkali Finance DAC's notes at BB-.

The negative outlook reflects Uralkali's higher-than-expected leverage, the agency said.

This will exceed the previous negative rating guideline of 4x in 2016 and 2017 on share buyback-driven accumulated debt and weak potash pricing environment, Fitch explained.

The agency also said it expects Uralkali's funds-from-operations net adjusted leverage to peak at 4.4x in 2016 before gradual reduction thereafter.

The ratings reflect Uralkali's strong operational profile, weak financial profile and a two-notch discount for corporate governance typically applied to Russia-based corporations with concentrated ownership, Fitch said.

The strong operational profile is underpinned by Uralkali's significant scale as a leading global potash producer and its sustained global cost leadership that translates into EBITDA profitability at more than 50% through the cycle, the agency said.

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