Moody's also raised its rating for the Severstal's loan participation notes, totaling $700 million, from B2 to B1. The outlook on both ratings is stable, a statement said.
Moody's said it attributed the upgrade to vertical integration within Severstal following the acquisition and integration of the mining assets from its parent company, Severstal Shareholder Group.
The integration should improve the company's resilience to business cycles as it is no longer exposed to price fluctuations of its key raw materials, will enhance the company's profitability as its mining assets also generate external revenues, and will improve the company's financial profile, the statement said.
The ratings are constrained by several factors, including Severstal's weakened operating performance in the first half of 2006, compared with the two previous years, and expectations of the further weakening of markets in 2007. The fiscal and legal environment also affected the predictability and stability of a company's operations, Moody's said.
Severstal's steel output was 6.5 million tones in the first six months of 2006, and net revenue stood at $4,376 million, with EBITDA of $1,121 million, the agency said.
