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Fitch Ratings downgrades Nitrogenmuvek Zrt's long-term issuer default rating

Published by , Deputy Editor
World Fertilizer,

Fitch Ratings has downgraded Nitrogenmuvek Zrt's long-term issuer default rating (IDR) and its senior unsecured rating to 'CCC+' from 'B-' and placed all ratings on rating watch negative (RWN). The recovery rating is 'RR4'.

The downgrade reflects operational disruptions and material deterioration in financial performance in 2023 versus prior expectations due to a fertilizer market downturn and gas prices rising above long-term averages. All this has heightened the refinancing risk of its €200 million eurobond maturing in May 2025.

In addition, the introduction of a tax on CO2 emissions applied retrospectively has led to production halt by the company, which will materially affect its profitability and competitiveness. While the company is challenging this tax, we believe it is unlikely to be resolved before the bonds' maturity.

As a result the RWN reflects the fact that Nitrogenmuvek will face a very high refinancing risk of May 2025 Eurobonds and a substantially increased possibility of default, in the absence of a significant improvement in fertiliser prices next year or an unanticipated equity cure. The RWN will be resolved once we have more certainty on the bonds refinancing, which may take place subsequent to six months in the future.

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