The credit rating of JSC “HC “METALLOINVEST” (hereinafter, Metalloinvest, or the Company) has been downgraded due to the growing leverage and debt service costs and declining marginality amid stagnating industries that are main consumers of the Company’s products. At the same time, ACRA expects the steel market to recover in 2026. Metalloinvest is currently carrying out a large-scale optimization of its business model, pushing down prime costs and updating capex program in order to improve the Company’s financial metrics.
Uncertainty caused by the expected growth of the industries that are consumers of the Company’s products, as well as a decrease in the FFO before net interest payments and taxes and the corresponding margin and an increase in the leverage and debt service costs has led to a change in the credit rating outlook to Negative.
The Company still holds the strong market position and maintains the very strong business score determined by the strong and high-quality resource base, thanks to which the Company’s production cost is one of the lowest in the mining segment not only in Russia, but in the world as well. The score for geography, the high level of corporate governance, and the strong financial profile support the Company’s rating.
Metalloinvest is a world-leading producer of hot-briquetted iron (HBI), a leading producer and supplier of iron ore and metal products, and a regional manufacturer of high-quality steel. The Company holds the world’s largest proven iron ore reserves. The Company’s production assets are Lebedinsky GOK, Andrey Varichev Mikhailovsky GOK, and Alexey Ugarov OEMK.
key assessment factors
The very business assessment reflects the presence of a first-class resource base for iron ore production, advanced technologies for enrichment and processing of ore into various products with high added value, as well as the geographic proximity of main production assets to key sales markets that ensures the diversification and continuity of production processes. The medium assessment of product diversification reflects the Company’s focus on iron ore production, as well as high iron ore processing (iron ore pellets, HBI). The steel segment is an additional step in ensuring the diversification and expansion of the Company’s product portfolio.
Metalloinvest delivers its final products (both ore and steel) to a wide geographic area.
The strong corporate governance assessment is based on the Company’s clear strategic goals, comprehensive risk management system, a board of directors that defines strategic goals and objectives and forms key committees for risk management, dividend policy, remuneration and motivation, etc. The assessment of the group’s structure takes into account its minor complexity, which is typical for vertically integrated holding companies. In terms of financial transparency, ACRA notes the high quality of audited financial statements, important aspects of which are disclosed in notes.
The financial profile. The scale of the Company’s business is assessed as very large for the Russian corporate segment (the weighted FFO before net interest and taxes is over 5 bps of GDP). The marginality is high, with the weighted FFO before net interest and taxes margin at 29%; the margin declined in 2025 to 20% vs. 36% a year earlier. The Company’s leverage is assessed as medium. The ratio of total debt adjusted for sureties to FFO before net interest grew to 5.7x in 2025 vs. 2.6x in 2024 due to the growth of the Company’s total debt and the decrease in FFO before net interest and taxes. The last year’s increase in the total debt was accompanied by the proportionate growth of cash and short-term deposits at about RUB 61 bln, and the total debt was RUB 427.6 bln at the end of 2025. Further, the debt is expected to gradually decline. The coverage sub-factor is assessed at the medium level. The coverage (ratio of FFO before net interest to interest) also deteriorated in 2025 and amounted to 1.4x vs. 4.8x a year earlier, but it is expected to grow in the future.
The liquidity assessment is high, taking into account funds held in accounts and undrawn limits under credit lines provided by banks.
The high assessment of the Cash Flow sub-factor is the result of a combination of the negative FCF margin associated with, among other things, dividend payments and capital expenses, and the high assessment of the ratio of capex to revenue (less than 15%).
key assumptions
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Production volume and sales in line with the Company’s business plan.
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Capital investment program in 2026–2028 as planned.
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Dividend payments in 2026–2028 as planned.
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Maintaining the current liquidity position.
potential outlook or rating change factors
The Negative outlook assumes that the rating will highly likely be downgraded within the 12 to 18-month horizon.
A positive rating action may be prompted by:
- Weighted leverage (total debt to FFO before net interest) remaining below 2.0x along with the weighted debt coverage (FFO before net interest to interest) exceeding 5.0x.
A negative rating action may be prompted by:
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Weighted leverage exceeding 3.5x;
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Weighted debt coverage falling below 2.5x;
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Weighted FCF margin declining below -3%.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): aa.
issue ratings
Exchange-traded interest-bearing non-convertible uncertificated bond subject to centralized title registration issued by JSC “HC “METALLOINVEST,” series 001Р-02 (RU000A1057D4), maturity date: September 10, 2027, issue volume: CNY 1 bln — AA(RU).
Interest-bearing non-convertible uncertificated bond subject to centralized title registration issued by JSC “HC “METALLOINVEST,” series 028 (RU000A105A04), maturity date: October 22, 2028, issue volume: USD 285,780,000 — AA(RU).
Exchange-traded interest-bearing non-convertible uncertificated bond subject to centralized title registration issued by JSC “HC “METALLOINVEST,” series 001Р-04 (RU000A105W08), maturity date: February 17, 2027, issue volume: RUB 7 bln — AA(RU).
Exchange-traded interest-bearing non-convertible uncertificated bond subject to centralized title registration issued by JSC “HC “METALLOINVEST,” series 001Р-06 (RU000A1079S6), maturity date: November 23, 2027, issue volume: RUB 15 bln — AA(RU).
Exchange-traded interest-bearing non-convertible uncertificated bond subject to centralized title registration issued by JSC “HC “METALLOINVEST,” series 001Р-08 (RU000A108WY1), maturity date: January 1, 2027, issue volume: RUB 10 bln — AA(RU).
Exchange-traded interest-bearing uncertificated bond issued by JSC “HC “METALLOINVEST,” series 001Р-09 (RU000A10AFX9), maturity date: June 17, 2026, issue volume: RUB 10 bln — AA(RU).
Exchange-traded interest-bearing uncertificated bond issued by JSC “HC “METALLOINVEST,” series 001Р-12 (RU000A10B0C8), maturity date: February 23, 2027, issue volume: CNY 1.5 bln — AA(RU).
Exchange-traded interest-bearing uncertificated bond issued by JSC “HC “METALLOINVEST,” series 001Р-13 (RU000A10B4D8), maturity date: March 10, 2027, issue volume: RUB 30 bln — AA(RU).
Exchange-traded interest-bearing uncertificated bond issued by JSC “HC “METALLOINVEST,” series 001Р-14 (RU000A10BQD6), maturity date: May 18, 2028, issue volume: RUB 45 bln — АA(RU).
Exchange-traded interest-bearing uncertificated bond issued by JSC “HC “METALLOINVEST,” series 002Р-01 (RU000A10C725), maturity date: July 12, 2028, issue volume: RUB 55 bln — АA(RU).
Exchange-traded interest-bearing uncertificated bond issued by JSC “HC “METALLOINVEST,” series 002Р-02 (RU000A10CSG3), maturity date: August 24, 2030, issue volume: USD 100 mln — АA(RU).
Exchange-traded interest-bearing uncertificated bond issued by JSC “HC “METALLOINVEST,” series 002Р-03 (RU000A10DQL5), maturity date: December 02, 2030, issue volume: RUB 20 bln — АA(RU).
Exchange-traded interest-bearing uncertificated bond issued by JSC “HC “METALLOINVEST,” series 002Р-04 (RU000A10E7W8), maturity date: February 08, 2030, issue volume: RUB 75 bln — АA(RU).
Exchange-traded interest-bearing uncertificated bond issued by JSC “HC “METALLOINVEST,” series 002Р-05 (RU000A10ENS5), maturity date: March 25, 2030, issue volume: RUB 60 bln — АA(RU).
Rationale. The bond issues listed above represent senior unsecured debt of the Company. Due to the absence of either structural or contractual subordination of the issues, ACRA regards them as equal to other existing and future unsecured and unsubordinated debt obligations of the Company. Per ACRA’s methodology, the simplified rating approach was applied, according to which the recovery rate on the issues belongs to category II, and therefore the issue credit ratings are equal to the Company’s credit rating and set at AA(RU).
REGULATORY DISCLOSURE
The credit ratings of JSC “HC “METALLOINVEST” and the bond issues of JSC “HC “METALLOINVEST” have been assigned based on the following methodologies: the Methodology for Assigning Credit Ratings to Non-Financial Corporations under the National Scale for the Russian Federation to calculate the SCA and determine the credit rating and the credit rating outlook of JSC “HC “METALLOINVEST” under the national scale for the Russian Federation; the Methodology for Assigning Credit Ratings to Financial Instruments on the National Scale for the Russian Federation to determine the credit rating of the bond issues under the national scale for the Russian Federation; the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities to ensure consistent and uniform application of ACRA’s methodologies, rating scales, models, and key rating assumptions.
The credit rating of JSC “HC “METALLOINVEST” assigned under the national scale for the Russian Federation was published by ACRA for the first time on September 15, 2020. The credit ratings of the bond issues of JSC “HC “METALLOINVEST” assigned under the national scale for the Russian Federation were published by ACRA for the first time: (ISIN RU000A1057D4) — Sep. 16, 2022, (ISIN RU000A105A04) — Nov. 02, 2022, (ISIN RU000A105W08) — Feb. 22, 2023, (ISIN RU000A1079S6) — Nov. 28, 2023, (ISIN RU000A108WY1) — Jul. 05, 2024, (ISIN RU000A10AFX9) — Dec. 24, 2024, (ISIN RU000A10B0C8) — Mar. 05, 2025, (ISIN RU000A10B4D8) — Mar. 20, 2025, (ISIN RU000A10BQD6) — Jun. 03, 2025, (ISIN RU000A10C725) — Jul. 28, 2025, (ISIN RU000A10CSG3) — Sep. 19, 2025, (ISIN RU000A10DQL5) — Dec. 08, 2025, (ISIN RU000A10E7W8) — Feb. 09, 2026, (ISIN RU000A10ENS5) — Mar. 26, 2026.
The most recent publication date of the credit rating of JSC “HC “METALLOINVEST” is May 14, 2025. The most recent publication dates of the credit ratings of the issues of JSC “HC “METALLOINVEST” are: (ISIN RU000A1057D4, ISIN RU000A105A04, ISIN RU000A105W08, ISIN RU000A1079S6, ISIN RU000A108WY1, ISIN RU000A10AFX9, ISIN RU000A10B0C8, ISIN RU000A10B4D8) — May 14, 2025, (ISIN RU000A10BQD6) — Jun. 03, 2025, (ISIN RU000A10C725) — Jul. 28, 2025, (ISIN RU000A10CSG3) — Sep. 19, 2025, (ISIN RU000A10DQL5) — Dec. 08, 2025, (ISIN RU000A10E7W8) — Feb. 09, 2026, (ISIN RU000A10ENS5) — Mar. 26, 2026.
The credit rating and its outlook and the credit ratings of the abovementioned bond issues of JSC “HC “METALLOINVEST” are expected to be revised within one year.
The credit ratings were assigned based on data provided by JSC “HC “METALLOINVEST”, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS financial statements of JSC “HC “METALLOINVEST” as of December 31, 2025.
The credit ratings are solicited and JSC “HC “METALLOINVEST” participated in their assignment.
In assigning the credit ratings, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
The decision to downgrade the credit rating of JSC “HC “METALLOINVEST” to AA(RU) and to change the outlook to Negative was made at a second meeting of the rating committee, taking into account ACRA’s consideration of a reasoned appeal against the decision of the primary rating committee to downgrade JSC “HC “METALLOINVEST” to AA(RU) and to change the outlook to Negative. In its appeal, JSC “HC “METALLOINVEST” provided a proposal regarding the approach to calculating the Company’s leverage, however, the credit rating and the credit rating outlook of JSC “HC “METALLOINVEST” did not change based after the consideration of the appeal.
ACRA provided the following additional services to JSC “HC “METALLOINVEST”: assessment of climate transition debt obligations from October 1, 2024 to the present.
No conflicts of interest were discovered in the course of credit rating assignment.
