S&P revises Mriya Agro Holding's outlook to stable
KYIV. Jan 14 (Interfax) - Standard & Poor's Ratings Services has revised to stable from negative its outlook on Ukrainian farming company Mriya Agro Holding PLC.
At the same time, it affirmed its 'B-' long-term corporate credit rating on Mriya, S&P said in a statement.
The recovery rating on the company's debt issues remains unchanged.
The outlook revision follows the rating agency's similar action on Ukraine where Mriya's core assets are concentrated.
S&P says that it believes that the improved creditworthiness of the sovereign will reduce the likelihood of the government instructing export companies to convert their hard currencies, which could otherwise weigh on Mriya's dollar-denominated debt service. The rating on Mriya reflects the agency's assessment of the company's "vulnerable" business risk profile and "significant" financial risk profile, as the rating agency's criteria define the terms.
S&P acknowledges that Mriya generates about 80% of its revenue through export, and consequently holds most of its cash offshore. This large amount of revenue denominated in dollars ensures debt service and is critical to the rating agency's assessment of the company's liquidity as "adequate." Still, the rating agency thinks that improved creditworthiness of the sovereign reduces the risk of restrictions on the transfer of funds outside Ukraine and of stringent currency controls.
According to S&P's upside scenario, Mriya's stand-alone credit profile of 'b+' could lead to a higher rating if S&P were to raise the rating agency's sovereign credit rating and T&C assessment on Ukraine and if it saw lower risk related to currency controls or repatriation requirements.
According to the downside scenario, if S&P were to lower the agency's ratings on Ukraine and revise the agency's T&C assessment downward, this could lead to a similar rating action on Mriya, but not automatically, especially if the company was able to show resilience to country-specific factors, including the risk of stricter currency restrictions.
S&P notes that Mriya benefits from recurrent streams of foreign currency inflows stemming from exports. This, combined with offshore cash accounts, mitigates local T&C issues.
Mriya was founded in 1992 by Ivan and Klavdiya Huta. It cultivates almost 300,000 hectares of land in four regions in western Ukraine. It grows wheat, barley, rapeseeds, sugar beet, buckwheat, and potatoes.
In June 2008, Mriya completed the private placement of 20% of shares worth a total $90.1 million.
