Moody's ups Hylsa

Moody's Investors Service said it raised Hylsa SA de CV's senior unsecured debt ratings to B3 from Caa3 based on Hylsa's sharply improved operating performance and use of cash flow for debt reduction stemming from improved steel industry fundamentals.

Moody's upgraded Hylsa's $139 million senior unsecured notes due 2007 to B3 from Caa3, its $161 million senior unsecured notes due 2010 to B3 from Caa3, its senior unsecured issuer ratings to B3 from Caa3 and its senior implied rating to B2 from Caa2.

Moody's said the rating also reflects the significant volatility inherent in the steel industry and the associated volatility in Hylsa's earnings and cash flow.

Hylsa's incremental profit and cash flow have enabled it to reduce total debt by about $85 million during the first half of 2004, thereby sharply lowering its leverage ratio to 2.0x at June 30 from 5.5x at year-end 2003.

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