Fitch upgrades Alrosa

Fitch Ratings said it upgraded the PJSC Alrosa's long-term issuer default ratings to BBB- from BB+, along with its short-term issuer default rating to F3 from B.

Alrosa Finance SA's senior unsecured rating also was upgraded to BBB- from BB+.

The outlook is stable.

The upgrades reflect a view that Alrosa's new dividend policy, coupled with the de-leveraging achieved over the past few years, will underpin greater cash flow resilience in a downturn, Fitch said.

Dividend payments are now based on free cash flow with a leverage ratchet, which increases financial flexibility and will support neutral to positive free cash flow generation through the cycle, the agency said.

The upgrades also consider management's public commitment to retain conservative financial metrics, which have been sustained at a very low level compared with other mining peers over the last three years, Fitch said.

The ratings also are underpinned by the company's leading position on the global rough diamond market, low cash costs and moderate capital expenditure, the agency said.

The ratings are constrained by its single-commodity profile and concentration of mining operations in Russia, as well as exposure to a single cyclical end-market, Fitch said.

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