Global ratings agencies Fitch, S&P, and Moody’s have withdrawn their ratings on major Russian fertilizer companies as part of their move to withdraw ratings on all Russian companies and their subsidiaries.

The withdrawal is in order to comply with the European Union’s (E.U.) decision on March 15 to ban the assignment of credit ratings to legal persons, entities, or bodies established in Russia, as well as a ban on providing rating services to Russian companies. The E.U. set a deadline of April 15 for the ratings to be withdrawn.

All three ratings firms previously announced the suspension of their commercial activities in Russia, following that country’s invasion of Ukraine on Feb. 24. At the time, they said they would support continued coverage from outside Russia.

Ahead of the ratings withdrawal, Fitch, S&P, and Moody’s downgraded their credit ratings of a number of Russian companies, including the fertilizer majors, as part of their downgrade of Russia’s sovereign ratings – and in some instances, due to loan interest payment defaults.

S&P Global Ratings on April 14 downgraded its Long-term Issuer credit rating on EuroChem Group AG to “SD” (selective default), and then subsequently withdrew its ratings on the company following the E.U. decision to ban the provision of credit ratings to Russian entities.

S&P said it downgraded the Zug, Switzerland-based fertilizer group to “SD” due to the missed coupon payment on the $700-million 5.5 percent fixed-rate note. The group had 10 days from the due date of March 13 to pay the overdue coupon before an event of default was triggered.

While the ratings firm noted that EuroChem had the funds to pay the due interest, it said the payment had not been processed “due to administrative difficulties stemming from the application of international sanctions.” The measures have restricted the ability of note-holders to receive interest, principal payments, or both, on time and in full.

In a statement on its website on March 31, EuroChem confirmed that on March 4, i.e., in advance of the interest payment date under the notes falling due on March 14, Citibank NA London Branch, as principal paying agent, was funded with the aggregate amount of $19,250,000, being the full amount required to be paid as March 2022 interest in accordance with the transaction documents.

Similarly, Acron Group, Moscow, said on April 4 that Fitch Ratings withdrew Acron’s Long-term Issuer Default Ratings (IDR) in foreign and local currencies and Short-term Default Rating on April 4. A month earlier, on March 5, Fitch had downgraded Acron’s Long-term IDR initially to “B” from “BB-“ and placed ratings on the Rating Watch Negative (RWN) on March 5 following the agency’s downgrade of Russia’s sovereign ratings.

Then, on March 14, Fitch downgraded Acron’s Long-term IDR in foreign and local currencies to “CC” and its Short-term IDR to “C” from “B” and removed the group from the RWN.

Moody’s Investors Service withdrew Acron’s Long-term IDR in foreign and local currencies and Short-term IDR on March 31. Moody’s had downgraded the group’s Long-term Corporate Family Ratings (Foreign) from “Ba3” to “Caa2” and Probability of Default rating from “Ba3-PD” to “Caa2-PD” on March 11 following the agency’s downgrade of Russia’s sovereign ratings to a negative outlook.

PhosAgro, Moscow, on April 4 reported its credit ratings by Fitch, Moody’s, and S&P Global Ratings had been withdrawn. On March 11, the Russian fertilizer group said following the downgrade of the Russian Federation’s sovereign rating, Moody’s and S&P had changed PhosAgro’s corporate rating. Moody’s changed its rating of the Russian fertilizer group from “Baa3” to “Caa2” and S&P had changed the group’s rating from “BBB” to “CCC-.”

PhosAgro said this week it would not publish its operating and financial results for first-quarter 2022. It said its approach had always been to publish reports for shareholders and for investors holding its Global Depositary Receipts (GDRs) simultaneously. But in view of the suspension in trading of the group’s GDRs, making its first-quarter operating and financial results public “would benefit some investors more than others,” the group said.

Russian potash producer Uralkali late last week said it was exploring alternative options for making the interest payment on its dollar-denominated bond, given the uncertainty relating to the processing of cross-border payments being experienced by Russian companies attempting to make payments on their bonds and loans.

The potash company is due to pay a bond coupon on April 22, and said it has sufficient liquidity to make its payment obligations as they fall due.

Last month, Uralkali experienced difficulties making an interest payment on its syndicated pre-export credit facilities to Credit Agricole Corporate & Investment Bank due on March 24. Uralkali said the paying agent would not accept the tranche from the company, and accordingly, the paying agent would not make the payment to the company’s lenders.

Companies through which PhosAgro PJSC founder Andrey G. Guryev and members of his family own stakes in the Russian fertilizer company have moved to Russian jurisdiction, Interfax reported on April 20.

The two holding companies, Chlodwig Enterprises AG and Adorabella AG, became residents of the special administrative region (SAR) on Oktyabrsky Island in the Kaliningrad enclave this week, according to the report, citing the SAR management company.

The companies were previously registered in Switzerland.

The shares in Chlodwig Enterprises and Adorabella have been transferred to trusts, the economic beneficiaries of which are Andrey G. Guryev, his wife, and daughter, according to the report, citing PhosAgro’s website. Chlodwig Enterprises and Adorabella together own 43.66 percent of PhosAgro, and Gurvey’s wife, Yevgenia, owns another 4.82 percent.

Gurvey and his son, Andrey A. Guryev, resigned their PhosAgro Board memberships in March after being included on the European Union’s (E.U.) expanded list of sanctioned individuals on March 9 (GM March 11, pp. 1 and 34). Andrey A. Guryev also stepped down as PhosAgro’s CEO.

Amid a surge of interest in domiciling in Russia’s SARs from Russian companies and business affected by sanctions, the Russian government in March submitted changes to the law regulating re-domiciliation to the State Duma (Parliament). The new law, which was fast-tracked by lawmakers, allows personal funds and trusts to be registered in Russia’s SARs, and significantly simplifies the re-registration of foreign companies in the SARs, according to the report.

In March, PhosAgro reported it had transferred control of all its foreign trading companies (GM March 18, p. 30). The fertilizer group previously held a 95 percent stake in Phosint Ltd., via which it controlled all its foreign trading companies. Through a management buyout of Phosint by its trading structures, 95 percent of its shares were transferred to a new company, Negrino Ltd., reducing PhosAgro’s stake in Phosint to 5 percent.

Russia is considering extending the domestic price freeze on fertilizers until the end of 2022. The current price freeze is due to end on May 31.

Russia’s Industry and Trade Ministry is working on a possible extension until the end of this year, according to a Bloomberg report, citing the ministry’s press service.

Russian fertilizer producers in November agreed to extend the price cap for the domestic market until the end of May (GM Nov. 19, 2021). Prices were first fixed in July, initially until the end of October.