Moody’s might lower Evraz

Moody's Investors Service said it placed the Ba3 corporate family rating and Ba3-PD probability of default rating of Evraz Group SA, and the B1 (LGD 5) senior unsecured ratings assigned to the notes issued by Evraz and Raspadskaya Securities Ltd., on review for downgrade.

Moody’s said the action reflects the material deterioration in Evraz's financial performance in the second half of 2015, which led to Evraz's year-end 2015 financial metrics weakening substantially beyond Moody's expectations.

As of year-end 2015, the company's gross debt/EBITDA rose to 4.7 times from 2.8 times at year-end 2014 and EBIT interest coverage fell to 1.8 times from 2.7 times (all metrics are Moody's-adjusted). This deterioration in metrics was driven primarily by the company's reported 40% decline in EBITDA due to weakened steel prices in the Russian and international markets.

The agency noted that Evraz's leverage is stronger on a net debt basis, with Moody's-adjusted net debt/EBITDA of 3.7 times at end-2015.

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