S&P rates CSN

Standard & Poor's said it assigned its BB local-currency corporate credit rating to Brazilian steel maker Companhia Siderúrgica Nacional (CSN). At the same time, the B+ foreign-currency corporate credit rating assigned to CSN, as well as to the guaranteed notes issued by its offshore subsidiaries, was affirmed.

The outlook on the local-currency corporate credit rating is stable. The outlook on the foreign-currency corporate credit rating is positive.

S&P said the local-currency rating reflects CSN's exposure to the volatile and cyclical global steel industry, which despite its current favorable price environment, has continually suffered from strong price oscillations in the past; the company's relative exposure to the volatile (and until recently sluggish) Brazilian economy; and a still heavy leverage profile (for analytical purposes, S&P adds up debts at the controlling shareholder level, as described below). Despite its improved duration, current debt levels still pose some risks to CSN in the future, as there is still some debt maturity concentration in specific years. Finally, the ratings incorporate the risks of CSN's significant capital expenditure program for the next three to four years, aimed at bringing the production capacity of its Casa de Pedra iron ore mine up to a pace of 40 million tons per year.

S&P added that these risks are offset by CSN's sound operating and business profiles, evidenced by its distinguished positioning in the global steel industry (as a low-cost, highly integrated carbon flat steel producer), strong export capabilities, and increasing business diversification in the years ahead with the addition of an iron ore export operation. The ratings also factor CSN's strong liquidity in the form of high cash reserves, and resilient and robust positive free operating cash flow.

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