SCF gets ratings upgrade

May 31 2019

Fitch Ratings has upgraded PAO Sovcomflot's (SCF) long-term issuer default rating (IDR) to 'BB+' with Stable Outlook from 'BB'/'Positive'.

Fitch has also upgraded SCF capital designated activity company's senior unsecured notes, which are guaranteed by SCF, to 'BB+'.

This upgrade reflected SCF's improved business profile, due to an expansion in industrial business, which contributed about 57% in total TCE revenue in 2018, up from 34% in 2016, Fitch said.

The rise was also supported by the agency’s expectation of funds from operations (FFO) adjusted net leverage moderation to about 5x in 2019 and to about 4.6x on average over 2020-2022 down from a peak of slightly above 7x in 2017.

The rating also incorporated SCF's large scale of operations, fairly young and specialised fleet, diversified customer base and exposure to market risks through conventional business.

The 'BB+' rating incorporates a one-notch rise to its standalone credit profile (SCP) of 'bb', reflecting the links to its parent, the Russian Federation (BBB-/Positive).

SCF’s corporate ratings from Moody’s (Ba1/Stable) and S&P (BB+/Stable) were unchanged.


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