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Jan. 12 (Bloomberg) -- OAO Mechel, Russia’s largest producer of coal for steelmaking, rose to the highest level in more than a month in New York after Otkritie Financial Corp. reiterated its “buy” recommendation on the stock.
American depositary receipts of the Moscow-based miner added 3.8 percent, settling at $10.05 in New York, the highest closing price since Dec. 7. The stock, which lost 71 percent last year, was the best performer on the Bloomberg Russia-U.S. 14 index of Russian companies traded in the U.S.
Moody’s Investors Service cut the outlook for Mechel’s credit rating to “negative” from “stable” last month after Chief Financial Officer Stanislav Ploschenko said the company may renegotiate debt covenants with lenders should the ratio of net debt to earnings before interest, taxes, depreciation and amortization exceed 3.5 this year. Moody’s rates Mechel B1, four steps below investment grade.
“Investors’ concerns over the company’s debt are way too exaggerated,” Denis Gabrielik, a Moscow-based analyst at Otkritie, said by phone. “The stock was declining because of those concerns, while the company has every chance to refinance.”
Otkritie left Mechel’s 12-month target price for the ADRs unchanged at $16.60, according to Gabrielik.
Mechel’s net debt climbed 29 percent to $9 billion in September, from the start of 2011, as the company upgraded steel mills and developed the Elga coal field in east Siberia, according to a Dec. 15 earnings statement. About $2.66 billion of Mechel debt matures this year, according to the presentation.
--Editors: Emma O’Brien, Marie-France Han
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