Moody's: Industrial Union of Donbass outlook negative

Moody's Investors Service said it confirmed the existing B1 rating of Industrial Union of Donbass and assigned a negative outlook.

This concludes the review for possible downgrade that began on Nov. 5 and was prompted by a significant weakening in the demand for steel products in the Ukraine and the strong reduction of steel prices.

The agency said the company has taken a number of corrective steps to address the immediate pressure on profitability and cash flow while benefiting somewhat from the competitive position of Ukrainian producers linked with the depreciation of the currency.

Nonetheless, given the lower-than-expected cash flow generation, Moody's said the company's significant proportion of short-term debt is a constraining factor. The negative outlook also reflects the effects of the weaknesses in the industry, the low visibility for prospects of short-term recovery and the current limitations for Ukrainian companies to receive long-term funding from their banks, the agency added.

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