Moody's upgrades Gerdau Ameristeel

Moody's Investors Service said it upgraded Gerdau Ameristeel Corp.'s corporate family rating and $405 million 10 3/8% guaranteed senior unsecured notes due 2011 to Ba2 from Ba3. The outlook is stable.

The agency said the upgrade recognizes Gerdau's progress over the last two years in growing its North American footprint of steel minimills and downstream fabricated products plants without pressuring its balance sheet. In addition, steel market conditions are expected to remain favorable in the near term, keeping Gerdau's credit metrics at safe levels.

Gerdau currently has a solid financial profile but still faces several challenges in addition to those common to the industry, Moody's said, including a lagging wire rod business due to high imports and higher-than-average risks related to labor issues and retiree benefit costs because many of its operations are unionized.

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