Fitch Ratings has said that if Mriya Agro Holding Public Limited's ('B-'/Stable; 'BBB(ukr)') planned bond issue is successful, it will allow the group to invest across the value chain in the promising Ukrainian agricultural sector.

However, large investments in capex and working capital will be required to achieve the group's ultimate growth targets. This will undermine Mriya's ability to generate sustainable free cash flows, at least in the first two to three years of the business plan. This is already factored into Fitch's current ratings on Mriya, the agency's press service reported.

"The outlook for Ukrainian agriculture is positive, given the low base of comparative production yields (tons/planted ha) and high prevailing commodity prices. This means private companies such as Mriya are favorably placed to take advantage of the environment, while reinforcing critical storage capacity. However, a number of factors remain outside of management's control, as is typical in agriculture, so a partially debt-funded growth strategy involves risks," says Pablo Mazzini, Senior Director at Fitch's European food and consumer group.

Fitch assigned Mriya's planned notes an expected rating of 'B-(exp)' and an expected recovery rating of 'RR4' on November 1, 2010. The final ratings on the notes are contingent upon the receipt of final documents conforming to information already received by Fitch.

The final ratings will be published after pricing, which is expected to occur by the end of March or in Q211.

UKRINFORM