International ratings agency Moody's has announced that it has downgraded the credit rating of Raspadskaya Coal Company (Raspadskaya), one of the largest coking coal producers in Russia, to B2 from B1, reflecting Moody's expectation of prolonged softness in coal prices, which will continue to negatively affect the company's financial situation over the next 12-18 months. In addition, the outlook has been changed to negative from stable.
According to Moody's, "The downgrade of Raspadskaya's rating was prompted by continued deterioration in the metallurgical coal sector, which is likely to remain oversupplied for at least several quarters as a result of weak demand from the end-user steel industry."
Moody's stated that the downgrade reflects Moody's view that demand in the metallurgical coal industry will remain weak in the near term following substantive deterioration in recent months. While some international producers have announced production cuts, the net impact on the global market is modest and the anticipated supply/demand balance is unlikely to support meaningful near-term price improvement.
