S&P: Gerdau off watch

Standard & Poor's said it removed its BBB- long-term corporate credit rating on Gerdau SA from CreditWatch, where it was placed with negative implications on July 11.

The agency said that the rating is also affirmed.

The outlook is negative.

S&P said that the rating actions reflect its expectations that despite the immediate increase in leverage due to Gerdau's acquisition of Chaparral Steel Co. for $4.22 billion, Gerdau's consolidated credit measures will rapidly improve to levels compatible with the rating category through a combination of stronger cash flows and some debt reduction.

According to the agency, the ratings on Gerdau reflect the company's adequate geographic diversification through the Americas and an expanding specialty steel business, with very strong and growing market shares in Brazil and North America, respectively, improved business profile of its North American operation and the expectation that the company will follow a prudent acquisition policy in the long term that will not consistently jeopardize its improved capital structure.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.