S&P ups JFE Steel ratings, other steelmakers

Standard & Poor's said it raised by one notch its long-term ratings on Nippon Steel Corp., JFE Holdings Inc., JFE Steel Corp., and Kobe Steel Ltd., reflecting stability in the Japanese steel industry and improvement in the companies' financial profiles.

At the same time, S&P said it revised the outlook on its B corporate credit rating on Sumitomo Metal Industries Ltd. to positive from stable and also affirmed the ratings on the company.

Nippon Steel's corporate credit rating was raised to BB+ from BB; JFE Holdings' and JFE Steel's corporate credit rating was raised to BB from BB-; and Kobe Steel's corporate credit rating was lifted to B+ from B.

The rating action affects JFE Holdings' ¥20 billion 0.89% bonds due Oct. 20, 2008 and ¥20 billion 1% bonds due July 30, 2010 as well as its ¥30 billion 0.74% bonds due Nov. 19, 2007, among the company's numerous other debt issues, according to S&P's Web site. The rating also affects Kobe Steel's ¥25 billion 2.1% bonds due June 10, 2004, among other company debt issues.

"The revisions reflect stability in the Japanese steel industry following industrywide consolidation, which has led steelmakers out of a period of fierce competition," said S&P credit analyst Makiko Yoshimura.

"Earnings at the companies are improving, and debt reductions are progressing. In addition, the financial profiles of the companies are expected to improve over the medium to long term as they seek stronger cash flows."

Nevertheless, the profitability of Japanese steelmakers remains weak compared with their top Asian peers.

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