Moody's downgrades five companies operating in Ukraine

Moody's Investors Service said it downgraded to Caa2 the corporate family ratings and to Caa2-PD the probability of default ratings of five companies operating in Ukraine: Ferrexpo plc, Fintest Trading Co. Ltd. (Donetsksteel), Lemtrans LLC, Metinvest BV and MHP SA.

Moody's also downgraded the national scale ratings of Metinvest to B1.ua from Ba3.ua, Fintest and MHP to B2.ua from Ba3.ua and Lemtrans to B3.ua from Ba3.ua. The senior ratings of notes issued by Metinvest, Ferrexpo Finance plc and MHP were downgraded to Caa2/(P)Caa2.

The outlook for all of the above ratings is negative.

The rating action follows Moody's downgrade of Ukraine's government bond rating to Caa3 from Caa2 and foreign-currency bond country ceiling to Caa2 from Caa1.

The agency said the affected companies' business profiles and financial metrics are strong for a Caa2 rating.

However, their ratings are constrained by Ukraine's foreign-currency ceiling because the companies are exposed to Ukraine's political, legal, fiscal and regulatory environment given that most or all of their assets are located within the country and because their debt is mostly in foreign currency, Moody's said.

The negative outlook is in line with the negative outlook for the sovereign rating and reflects the fact that a potential further downgrade of Ukraine's sovereign rating may result in the further lowering of Ukraine's foreign- and/or local-currency bond country ceiling, the agency said.

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