Moody's: Gerdau view to stable

Moody's Investors Service said it affirmed Gerdau SA's Ba3 corporate family rating and the Ba3 ratings of the debt issues of Gerdau Trade Inc. and GTL Trade Finance Inc.

The agency also said it revised the outlook on all three companies to stable from negative.

The ratings affirmed include Gerdau Trade's $750 million senior unsecured notes due 2023 at Ba3 and GTL Trade's $1.25 billion senior unsecured notes due 2024 at Ba3 and $500 million senior unsecured notes due 2044 at Ba3.

The stable outlook reflects the resilience of Gerdau's operations in 2016 and the first half of 2017 despite Brazil´s market downturn, supported by the initiatives taken by the company to reduce costs, Moody's said.

Although Gerdau's main markets – namely Brazil and the United States – continue to weaken, the company's adjusted EBITDA margins have slowly recovered in the past few quarters, the agency said.

Moody's said it does not expect any material recovery in the steel industry in Brazil at least through 2018.

But declining inflation and interest rates should support a gradual recovery in the commercial construction and homebuilding segments compared to 2016 levels, the agency noted.

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