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S&P: Erdemir outlook negative
Standard & Poor's said it revised the outlook on Eregli Demir ve Celik Fabrikalari TAS, or Erdemir, to negative from stable and affirmed the BB- long-term corporate credit rating.
This reflects a combination of sharply deteriorating global steel market conditions, together with heightened liquidity risks arising from Erdemir's reliance on uncommitted bank financing at times of turbulent credit markets, the agency noted.
The outlook revision reflects expectation of Erdemir reporting lower steel volumes in 2009 due to sharply deteriorating demand in its key markets of automotive, construction and consumer sectors, according to the agency.
Ratings reflect Erdemir's position as the largest Turkey-based steelmaker in a cyclical and capital-intensive industry, ongoing raw material cost pressures exacerbated by low self-sufficiency in iron ore and coking coal, concentration in an increasingly competitive domestic market and country risks in the Republic of Turkey (foreign-currency BB-/negative/B; local-currency BB/negative/B), the agency said.
Ratings are supported by Erdemir's leading domestic market position and well-diversified customer base, S&P noted.
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