Fitch lifts Gerdau from junk

Fitch Ratings said it upgraded the foreign-currency issuer default rating of Gerdau SA to BBB- from BB+, assigned BBB- local-currency issuer default and AA+(bra) national scale ratings to the company and affirmed the BBB- rating on its $600 million 8 7/8% guaranteed perpetual senior notes.

The agency also affirmed the BBB- local- and foreign-currency ratings and AA+(bra) national scale rating of Gerdau's operating subsidiary, Gerdau Acominas SA.

The outlook is stable.

The upgrade of the Gerdau holding company rating reflects the improved access to cash outside of Brazil via international credit facilities and the fact that most debt at the Gerdau level benefits from guarantees by Gerdau's Brazilian operating subsidiaries, the agency said.

The new rating reflects the favorable business positions of the company's main steel production subsidiaries, Acominas and Gerdau Acos Longos SA in Brazil and Gerdau Ameristeel Corp. in North America, as well as the group's strong consolidated financial profile characterized by low leverage and healthy liquidity, Fitch added. At Sept. 30, Gerdau's net debt-to-operating EBITDA ratio was 0.4x.

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