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S&P assigns rating to PhosAgro's Senior Unsecured Notes

On January 10, 2018, S&P Global Ratings assigned its 'BBB-' issue rating to PhosAgro Bond Funding Designated Activity Company's proposed senior unsecured notes. This issuance is for the sole purpose of financing a loan to PhosAgro PJSC (BBB-/Negative/--), the rating agency informed.

The loan will be unconditionally and irrevocably guaranteed by Apatit JSC (not rated), a subsidiary of PhosAgro, and will rank pari passu with PhosAgro's other unsecured debt. Apatit accounts for over 80% of PhosAgro's revenues, EBITDA, and assets. It holds PhosAgro's mining licenses and owns and operates the key production facilities for phosphate-based and nitrogen-based fertilizers. This includes the recently constructed ammonia and urea facilities.

As per the preliminary prospectus, PhosAgro intends to use the net proceeds of the loan to refinance the loan provided by PhosAgro Bond Funding Designated Activity Company that was financed through the issuance of $500 million notes in 2013, maturing in February 2018. Given the refinancing purpose, S&P does not expect PhosAgro's leverage ratio to increase after the new issuance from about 2.1x that S&P estimates at year-end 2017. S&P assumes this will gradually improve in 2018-2019 (see "Russian Fertilizer Producer PhosAgro 'BBB-' Ratings Affirmed; Outlook Remains Negative," published Dec. 26, 2017, on RatingsDirect).

PhosAgro's capital structure consists of unsecured debt, almost all of which is concentrated at the operating subsidiaries. As of third-quarter 2017, PhosAgro's gross debt totaled Russian ruble (RUB) 115.2 billion (about $2 billion) compared with RUB112.4 billion at year-end 2016. It included two Eurobonds due in February 2018 (to be refinanced with the new issuance) and November 2021, each with a nominal value of $500 million. It also included bank loans, primarily at Apatit or PhosAgro-Cherepovets JSC (now merged into Apatit), which are the guarantors of the outstanding bonds. As a result, S&P considers the proposed notes to rank pari passu with the bank loans.

PJSC PhosAgro (tax number: 7736216869) is a Russian vertically integrated company, a global leader in the production of phosphorus-containing mineral fertilizers. PhosAgro's Global Depositary Receipts are listed on the LSE and the Russian stock exchange.

In 2013, PhosAgro floated an SPO in the amount of $466.662 million. BofA MerrillLynch, Citigroup, Credit Suisse, Raiffeisen Bank International, RenaissanceCapital, SberbankCIB and VTB Capital acted as joint global coordinators and joint bookrunners of the SPO.

IFRS net profit of PhosAgro for H1 2017 decreased by 53% to RUB 11.719 billion from RUB 24.835 billion the year before. Revenue dropped by 13% to RUB 89.121 billion, EBITDA by 40% to RUB 24.887 billion.

"AK&M", 11.01.2018 17:19


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