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Moody's shifts outlook on Ferrexpo to positive

Moody's on Dec. 4 changed its outlook on Ferrexpo Plc to positive from stable.

At the same time, it affirmed the company's corporate family rating and probability of default rating at Caa1 and Caa1-PD, respectively. Moody's also affirmed the senior unsecured notes rating at Caa1 issued by Ferrexpo Finance plc.

The move reflects the company's improved liquidity profile with no refinancing risk for its 2018 debt maturities of US$298 million, as it recently signed a US$195 million pre-export finance facility due 2020.

The company's free cash flow generation is expected at between US$150 million and US$200 million in 2017, supported by improved iron ore prices, and about US$80 million in 2018.

This will also provide more time for Ferrexpo to manage its debt maturities in 2019, where some refinancing risk remains given its presence in Ukraine.

The shift in outlook is also underpinned by a strong financial profile with very low leverage.

The company's Caa1 rating remains constrained due to the foreign currency bond country ceiling of Ukraine at Caa1 and its exposure to the government's political, legal, fiscal and regulatory environment.

The ratings also reflect the group's exposure to a single commodity, with its iron ore resources concentrated in a single large deposit in central Ukraine, which increases production outage risk.