09.11.2007 - MDM Comment: Evraz Seeks $3.2 Billion Loan for Five Years, Interfax Reports

A quick comment to the news: its good and bad. Good that Evraz apparently decided to avoid issuing Eurobonds in order to refinance the Oregon-related bridge. (still, CDS on Evraz may widen a bit on the back of new debt supply). As we understand, the upsizing of the loan from previously discussed USD2.4bn doesn't mean increased investment appetite. We spoke to the company and they told us that approximately 80% of the USD3.2bn will be used for refinancing purposes (some more brigdes will be repaid on top of the USD1.8bn one). The company will retain the USD500m unsecured line but will not necessarily utilize that.

Bad part: The fact that the bulk of loan is secured (that's not officially confirmed by the company) may damage the ratings on Evraz's unsecured bonds. Moody's particularly likes to notch down to reflect subordination.