...Russia and FSU Rail Transport: Macro Drivers Pressure Ratings We expect pressure on volumes and rates to continue in most former Soviet Union (FSU) countries in 2016 due to challenging market fundamentals and increasing competition from other means of transport, especially for crude oil transportation. The anticipated single- to double-digit inflation level will add to pressure on companies' margins. The ability to cut costs will be critical to support margins and cash flows. Lower rail fleet production coupled with gradual disposals of older fleets could result in a recovery in rail fleet rates in Russia. The majority of Azerbaijan and Georgian Railways revenues are denominated in US dollars and Lemtrans' tariffs are linked to the US dollar/hryvna exchange rate, and this should help to offset volume pressure What to Watch Limited Credit Metrics Headroom: The majority of rated transport companies have pursued conservative credit policies compared with their international peers, which should...
