--Long-term foreign & Local currency Issuer Default Ratings (IDRs) at 'BBB-';
--National scale rating at 'AA+(bra)'.
The Rating Outlook remains Stable.
A full list of ratings follows at the end of this release.
KEY RATING DRIVERS
Geographically Diversified Operations
Gerdau's ratings are supported by its position as the leading geographically diversified long steel producer in the
Stable Capital Structure
The company's investment grade ratings are also supported by its historical and projected through-the-cycle credit profile, robust liquidity, dynamic production structure and vertical integration to varying degrees in scrap, iron ore and coal. Gerdau maintains a commitment to a conservative capital structure, as demonstrated by its public stock offering in
Net Leverage Declines
Gerdau faced a difficult trading environment for long steel over the past two years whereby external factors prevented the company from increasing prices while raw material costs increased. Nevertheless, the company's net debt-to LTM EBITDA ratio peaked ratio declined to 2.6x as of
Robust Liquidity and Manageable Debt Maturity Profile
Gerdau has low refinancing risk with a debt average life of 5.3 years and held over
A downgrade could occur following a prolonged duration of depressed worldwide demand for steel products that would fundamentally change Gerdau's medium-term capital structure. In addition, a change in management strategy with regards to large debt-funded acquisitions could also negatively affect Gerdau's credit profile, as would a significant erosion of its liquidity position. A downgrade could also occur following a sustained deterioration in the company's long term credit ratios, particularly if its long-term net debt to EBITDA ratio increased to more than 3.0x on a sustained basis.
An upgrade or positive Outlook could be considered following a significant improvement to Gerdau's credit profile with a net debt/EBITDA ratio at around 1.5x alongside consistent strong FCF generation, in addition to optimizing and improving its competitive position globally. The ratings could also be upgraded following the monetization of the company's iron ore assets, with the proceeds being used to deleverage the company significantly in the long term.
Fitch affirms Gerdau's ratings as follows:
--Foreign currency IDR at 'BBB-';
--Local currency IDR at 'BBB-';
--National long-term rating at 'AA+(bra)'.
--Port Auth of the
In addition, Fitch has affirmed and withdrawn the following ratings:
These ratings were withdrawn as these entities are no longer considered analytically meaningful for the credit quality of the notes that have been issued out of them. All of the aforementioned notes that have been issued by these special purpose entities were fully guaranteed by Gerdau and the ratings of those issuances remain outstanding.
The Rating Outlook is Stable.
Additional information is available at 'www.fitchratings.com'.
--'Corporate Rating Methodology' (
--'National Ratings Criteria' (
--'Evaluating Corporate Governance' (
Corporate Rating Methodology ??? Effective
Evaluating Corporate Governance
National Scale Ratings Criteria
Source: Fitch Ratings
Most Popular Stories
- Prosecutor to Investigate Walmart Police Shooting
- GM to Announce New Jobs in Tennessee
- Mark Sanchez Suddenly a Hot QB Commodity
- Smith & Wesson Misses Target
- Emirates Hit Libyan Targets With Airstrikes
- Michael Brown Funeral: Can Americans Change the Script of Violence?
- Marco Rubio Warns Obama on Deportations
- American Killed With ISIS Fighters in Syria
- Surf's Up! SoCal Prepares for Big Storm Surf
- Ford Hires 300 at Louisville Lincoln Plant