Fitch affirmed MHP SE at 'B+' with Stable Outlook

American credit rating agency Fitch has affirmed MHP SE's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) and senior unsecured rating at 'B+'. The rating Outlook is Stable.

"MHP SE's Long-Term Local-Currency (LC) IDR of 'B+' continues to benefit from a one-notch uplift from Ukraine's Long-Term LC IDR, reflecting an increasing share of profits outside the country, as well as MHP's strong business profile with reasonable scale and vertical integration, both translating into high operating profitability. The Foreign-Currency (FC) IDR at 'B+', one notch above Ukraine's Country Ceiling of 'B', is supported by a strong hard-currency debt service ratio," the agency writes.

As reported, the affirmation reflects the revision of projected 2020 revenues and EBITDA due to low poultry prices, which will persist during most of the year, after a material decline in 2H19, with only a gradual recovery from 2021.

Tighter profitability also supports the agency's expectations of tight debt incurrence covenant headroom in 2021, although liquidity remains solid.

Fitch also considers a recently approved related-party loan, which consists of a USD 80 mln revolving credit facility to the main shareholder WTI Trading, which is temporary in nature, but out of line with MHP's historical governance practices.

In June 2019, Fitch affirmed the company at 'B' with Stable Outlook.