IBI-Rating has upgraded the credit ratings of «Ukrzaliznytsia» PJSC

IBI-Rating informs on upgrading of the long-term credit rating of «Ukrzaliznytsia» PJSC from uaBB at uaBBВ- grade with change the outlook from «positive» to «in development».

Revision of the credit rating of the bonds is due to the obtaining of permit from the owners of Eurobonds to exclude from the conditions of circulation the reservation by cross-default under bank loans, which are being restructured. Also, the Rating agency notes a positive dynamics of financial results, the timely execution of debt obligations and reduction of the debt burden level.

According to the consolidated financial statements, compiled under IFRS, net income of «Ukrzaliznytsia» PJSC in 2017 increased by 11.1% - amounted to UAH 73 938.2 million, as compared to the previous year. The result of the activity was net profit of UAH 114.5 million, whereas during the previous several years the activity was unprofitable.

Due to the phased repayment of bank loans, and as a result of the full repayment of domestic bonds, the liabilities of «Ukrzaliznytsia» PJSC for borrowing fell to UAH 33,511 million eq. Net financial liabilities at the end of 2017 decreased by 4.9% and amounted to UAH 33,379 million eq. The sensitivity to foreign exchange risk is partially reduced by the availability of foreign exchange earnings from transit traffic. In addition, in 2018 «Ukrzaliznytsia» PJSC plans to launch quasi-hedged instruments.

At the end of 2017, the ratio of net financial liabilities of «Ukrzaliznytsia» PJSC and EBITDA was amounted to 1.65x, against 1.75x in 2016. EBITDA exceeded net financial expenses of 6.84 times.

«Ukrzaliznytsia» PJSC is formed on the basis of the State Administration of Railway Transport, enterprises and institutions of public railway transport, which are reorganized by merger. «Ukrzaliznytsia» PJSC is a natural monopolist on rail transport in the territory of Ukraine, which provides a stable cash flow from operating activities. At the same time, the Company depends on state regulation, first of all, setting tariffs for transportation. There is a need for significant investments in the renovation of rolling stock of «Ukrzaliznytsia» PJSC, due to high wear and tear.

Materials used for conducting the analytical research were obtained from «Ukrzaliznytsia» PJSC, including: financial statements for 2015-2017 and 3 months of 2018, reference information on the activities of «Ukrzaliznytsia» PJSC, information on issues of interest-bearing bonds, other necessary internal information, as well as information from open sources, which the Rating Agency considers to be reliable.

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