S&P downgrades Ferrexpo

Standard & Poor’s said it lowered its long-term corporate credit rating on Ferrexpo plc to SD (selective default) from CCC and its short-term rating to SD from C.

S&P also lowered the issue rating on the $286 million senior unsecured notes to D (default) from CCC. S&P placed the CCC rating on the rest of Ferrexpo’s outstanding senior unsecured notes on CreditWatch with positive implications.

S&P said the downgrade follows Ferrexpo’s recent announcement that about 90% of the noteholders voted in favor of exchanging the outstanding $286 million senior unsecured notes due 2016 for new senior unsecured notes. The company expects to complete the exchange offer in the coming days.

“According to our criteria, we view this as a distressed exchange and tantamount to a default, given our assessment of the liquidity as ‘weak,’ the company’s credit standing in the market, and the fact that minority noteholders are being forced to exchange their notes,” S&P said in a news release.

S&P said it expects to raise the long-term rating on Ferrexpo to CCC or CCC+ over the coming days.

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