Fitch affirms Magnitogorsk Iron

Fitch Ratings said it affirmed Russia-based Magnitogorsk Iron and Steel Works' senior unsecured rating at BB- with a stable outlook.

Fitch said the rating reflects Magnitogorsk's strong track record in terms of financial performance and accessing capital markets, competitive domestic positions and ability to exploit rising demand for steel in Russia. It also takes into account the company's planned shift in focus to value-added products to support revenue growth. Strong financial metrics, significant modernization and a track record in conservative financial management underpin the company's credit profile.

However, the rating is constrained by Magnitogorsk's limited transparency, Fitch said. Following ownership changes in December 2004, the company has changed its shareholding structure to be wholly private, dominated by financial institutions. However, disclosure of the ultimate investors is limited due to a trustee-type structure.

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