North-East Coal Company's Credit Rating Affirmed
OREANDA-NEWS. National Rating Agency has affirmed its national scale credit rating on North-East Coal Company CJSC (NECC) at 'A'.
The rating is supported by the company's increasing revenue, long-term debt maturity profile and strong liquidity position. The rating affirmation is driven by NECC's favourable business prospects supported by the resource base size and growth potential, possible step-by-step expansion of production volumes and export infrastructure development, as well as the proximity to steadily growing markets. We also note the high profitability of NECC's mining operations and stable demand for its coal, as well as the strong beneficiary owners who would most likely provide a timely and sufficient support to NECC in case of distress.
Offsetting these strengths are the currently low business volumes associated with the company's early stage of development, which, in our opinion, will last for another 2-3 years. NECC heavily depends on affiliated companies for operating support and equity financing. At the same time, we believe that NECC's affiliation with VGK Group helps mitigate the investment, debt burden and strategy related risks.