ALROSA reported that it had significantly reduced its debt burden by making an early repayment of a part of its $720 million bank loan due in 2019 with an interest rate of 4.3 percent and refinancing the balance at lower rates.
S&P improved ALROSA's credit rating in July this year to match the BB+ sovereign rating, which has opened up new opportunities for borrowing cost reduction. From September to November ALROSA conducted a competitive procurement process among Russian and international banks, following which $600 million out of $720 million were refinanced through two new loans of $350 million and $250 million issued by Raiffeisenbank and Rosbank, respectively, due for repayment in December 2018. The remaining balance of $120 million was repaid ahead of schedule using the Company's free cash flow. These initiatives have reduced ALROSA's debt to $1.84 billion.
"We managed to borrow from international banks at a rate lower than the yield to maturity of ALROSA's Eurobonds, which confirms the company's stable financial position. The impact of lower interest rate payments driven by these initiatives will exceed $30 million," said ALROSA Chief Financial Officer Alexey Philippovskiy.