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March 29, 2019 www.intellinews.com I Page 12
Fitch assigns Russian aluminium major Rusal BB- IDR, post-sanction revival expected
Fitch Ratings assigned Russian-based aluminium company United Company Rusal Plc a long-term Issuer Default Rating (IDR) of 'BB-', with a stable outlook, the agency said on March 25.
In February, the US Treasury Department Office of Foreign Assets Control (OFAC) removed Rusal and other assets of Russian billionaire and Kremlin insider Oleg Deripaska from the US Specially Desig- nated Nationals And Blocked Persons List (SDN List).
BCS Global Market wrote on March 26 that it previously recommended increasing positions in RUALRU bonds, expecting spreads to tighten after credit rating restoration. The analysts saw
the rating at “BB-” level, and now see the current yield decline potential at no more than 30bp as almost all upside has been realised.
"Ratings from S&P or Moody’s (or both) will be restored shortly,” BCS GM analysts believe.
"Rusal successfully managed its operations under the US sanctions with limited impact," Fitch commented on the rating action, noting that "due to several extensions granted to the company's grace period by the OFAC, Rusal did not bear the full impact of the sanctions."
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Russia's MTS mobile major shows solid 4Q18, pleases with dividend guidance
Major Russian operator Mobile TeleSystems (MTS) posted 11% revenue growth under IFRS in the fourth quarter of 2018, 6% year-on-year Ebitda advance and 30% y/y net income growth, all com- ing in above the consensus expectations.
The company managed to maintain the mobile service revenue in Russia at 1.6% growth, same as in 3Q18, despite facing full quarter of intra- country roaming cancellation. MTS also posted 10% revenue UAH-denominated revenue growth in Ukraine.
The sales of handsets in Russia grew by 22% in the reported quarter, although it must be noted that the sales could have been hyped by the front- loaded purchases ahead of the January 2018 VAT
hike. MTS announced the guidance for 2019 at 3% revenue increase, flat to slight decline in Ebitda and up to RUB90bn ($1.4bn) capital spending.
"Guidance for 2019 is cautious, considering nega- tive factors in place," BCS Global Markets said on March 19. "That said the company tends to guide conservatively recently: for 2018 it forecasted 2% Ebitda growth vs delivered 6%."
The major risk factor for the sector remains the implementation of the data storage or the so- called "Yarovaya Law". The capex forecast for the law was cut by MTS from RUB60bn to RUB50bn for five years.
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