International credit ratings agency Moody’s has revised its outlook for Russian mining and steelmaking company Evraz to stable from positive and has affirmed the company’s Ba1 corporate family rating.
The revised outlook reflects the impact of the coronavirus outbreak on Evraz and the broad deterioration in credit quality it has triggered, as SteelOrbis understands. Evraz’s Ba1 rating factors in its ability to generate positive cash flow amid the challenging market environment.
The rapid spread of the coronavirus pandemic, the deteriorating global economic outlook and falling oil prices are creating an great impact on many sectors including the steel sector due to lack of demand. The weakness in Evraz’s credit profile, including cyclical end-markets such as the construction industry, which is the main consumer of Evraz’s steel products has left the company vulnerable to shifts in market sentiment in these unprecedented operating conditions.
Evraz’s rating takes account the contraction of demand for steel in 2020 in all of Evraz’s key regions including Russia and the US, with the construction sector in Russia and the OCTG sector in the US particularly hit by the impact of the coronavirus.