RAEX Rating Agency (Expert RA) upgraded its long-term credit rating of ICT Holding Ltd (ICT) from ruA- to ruA, with stable outlook.

The Agency’s move reflects its upbeat assessment of ICT’s cash flow adequacy for servicing debt obligations and making principal payments.

Rating upgrade came on the heels of a sharp drop in the Company’s liabilities and strong appreciation of its equity stake in Polymetal, boosting the Holding’s liquidity position. The value of ICT Holding’s stake in Polymetal has increased from USD 1.6 bn on June 30, 2019 to USD 2.7 bn on June 30, 2020 (reporting date). At the same time, liabilities decreased from USD 819 mn to USD 543 mn, respectively. After the reporting date in September 2020, ICT Holding sold 4% of its 28.87% interest in Polymetal, raising around USD 440 mn. Part of the proceeds will be used to repay the Company’s outstanding debt. Agency estimates that ICT Holding’s outstanding liabilities may drop below USD 300 mn by year end.

As on June 30, 2020, ICT Holding’s liquidity position was considered strong, to be further boosted by the sale of a 4% stake in Polymetal.  Historically, ICT Holding has used its Polymetal stake as a key collateral asset for investment purposes, allowing the Company to tap into REPO funding. In the first half of the year, the Holding built an international equity portfolio in the amount of USD 250 mn and increased it to slightly over USD 500 mn by the time of the rating. The portfolio’s value may reach USD 600 mn by the end of 2020, which, according to the Agency’s estimates, may be twice the amount of the Company’s liabilities by year end. The said equity portfolio is highly liquid and can be used as collateral to raise finance in the international markets at low interest rates. It is also broadly diversified, with the largest component not exceeding 9% of the total value, and contributes to the diversification of the Holding’s assets and revenue streams.

As on June 30, 2020, ICT Holding’s assets and equity under IFRS reporting amounted to USD 3.4 bn and USD 2.86 bn, respectively. The Company reported USD 1.16 bn in earnings for the period from June 30, 2019 to June 30, 2020.