Fitch lifts ChelPipe view to stable

Fitch Ratings said it revised PJSC Chelyabinsk Pipe Plant's (ChelPipe) outlook to stable from negative and affirmed its long-term foreign-currency issuer default rating at BB-.

The stable outlook reflects an expectation that ChelPipe will be able to reduce its funds from operations-to-adjusted gross leverage toward 3.5x by 2020, from a peak of 4x at year-end 2017, Fitch said.

Leveraged peaked as one-off factors, such as low-margin export share hike and steel input volatility, fade out from 2018, the agency said.

The outlook revision reflects greater visibility on projects that will help the group recover its large diameter pipes (LDP) volumes post-2019, Fitch said.

The market for these pipes remains sensitive to Gazprom's megaprojects, although replacement needs for the existing Russian pipeline system, one of the largest globally, partly mitigates the volatility, the agency said.

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