S&P revises Evraz view to negative

S&P said it affirmed Evraz plc’s BB+ rating and changed the outlook to negative from stable.

“Headroom under the current rating will shrink in 2020 because of weak market conditions but should bounce back in 2021 as the steel and coking coal industries recover. We expect FFO to debt will fall to about 31%-36% and debt to EBITDA will rise to 1.8x-2.3x, versus 44.2% and 1.5x, respectively, in 2019. This will be the result of EBITDA falling to about $1.9 billion-$2.1 billion, compared with $2.6 billion in 2019, primarily owing to lower steel prices and a weaker coking coal market,” S&P said in a press release.

The negative outlook signals S&P could downgrade Evraz if FFO to debt were to remain around or fall below 30% in 2021, primarily due to low coal prices and while the rest of the steel industry recovers.

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