S&P upgrades Erdemir

Standard & Poor’s said it raised the long-term corporate credit rating on Eregli Demir ve Celik Fabrikalari TAS (Erdemir) to BB- from B+.

The upgrade reflects Erdemir’s strong operating performance and de-leveraging in 2014 and 2015, S&P said.

The outlook is stable.

Erdemir continues to benefit from the Turkish flat steel industry’s supportive supply and demand balance, high capacity utilization rates and a leading domestic-market position, the agency said.

S&P said it believes Erdemir can maintain an adjusted debt-to-EBITDA ratio of less than 3x, even including debt at Ataer, a special purpose vehicle owned by Oyak (Turkish

Armed Forces Assistance) pension fund.

Erdemir’s business risk profile is considered fair, reflecting the company’s position as the only integrated flat steel producer in Turkey with high capacity utilization and above-average profitability, the agency said.

The company’s financial risk profile is considered significant considering its estimated ratio of adjusted debt-to-EBITDA is less than 3x, S&P said.

The ratings also take into account the high volatility of Erdemir’s profits and its leverage metrics as the wide swings between 2009 and 2012 illustrate, the agency added.

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