Moscow, 26 June 2019. Fitch Ratings has upgraded SIBUR’s long-term issuer default rating (IDR) to ‘BBB-’ from ‘BB+’. The Outlook is Stable.
The upgrade follows Fitch’s decision from a year ago to revise its outlook for SIBUR’s Long-Term Issuer Default Rating (IDR) to Positive. The current upgrade reflects significant progress on the ZapSibNeftekhim project, including the completion of major production units ahead of schedule and on budget and the start of commissioning, while maintaining leverage below the Agency’s forecasts throughout the intensive investment cycle. According to Fitch, expected growth in SIBUR’s EBITDA following ZapSib’s launch will translate into higher margins and reduced volatility in operating cash flows through the expansion of the petrochemical business, which is less sensitive to the volatility of oil markets.
SIBUR outperformed the Agency’s rating cases in 2017-2018 with funds from operations (FFO) adjusted net leverage maintained at 2.0x despite significant expansionary investments.
The Stable Outlook reflects Fitch’s view that the deleveraging forecast on the back of ZapSib's ramp up will provide sufficient headroom for new projects under consideration and create opportunities for a potential increase in dividend payments.
Alexander Petrov, member of the Management Board and CFO of SIBUR, said:
“Last year, Moody’s assigned a Baa3 long-term issuer rating to SIBUR, with a stable outlook. Investment grade ratings from two rating agencies will allow us to widen the pool of potential investors two- to threefold with funds that invest in low-risk securities. When revising SIBUR’s rating Fitch considered the scale of the Company as well as its business model, which ensures cash flow stability. Completion of the ZapSibNeftekhim plant significantly reduces budgetary risks, while its launch will increase the share of the petrochemical business in our overall portfolio, making it more diverse and resistant to changes in the macro environment. It is worth noting that SIBUR’s ratings have been continuously upgraded over an extended period of time.”