S&P Global Ratings and Moody's on Feb. 1 upgraded their ratings for Brazilian steelmaker Cia. Siderúrgica Nacional, or CSN, largely due to its debt refinancing deal reported the same day.
On the same day, CSN launched a debt repurchase offer for US$750 million of the senior unsecured notes.
S&P Global Ratings raised its rating for the company to CCC+ from CCC on the global scale while upgrading the company's Brazilian-scale ratings to brB from brCCC, with a positive outlook. The rating agency also removed the company's ratings from CreditWatch with negative implications.
"The extended debt amortization profile, lower interest expense, due to the sharp decline of the base interest in Brazil in 2017, and absence of covenant breach risk following the presentation of the 2016 financial statements in late 2017 underpin our view of CSN's cash flow relief," S&P Global Ratings said.
However, the agency said the CCC+ rating reflects the significant amount of debt coming due in 2019 and 2020, especially the US$750 million and US$1.2 billion senior unsecured notes.
Meanwhile, the positive outlook means S&P Global Ratings may upgrade CSN's ratings in the next 12 months if the company can capitalize on improved market conditions and manages to reduce short-term cash flow pressures.
Moody's raised CSN's global-scale rating to B3 from Caa2 and national-scale rating to B2.br from Caa2.br, while changing the outlook on the ratings to stable from negative.
As of Jan. 31, US$1 was equivalent to 3.174 Brazilian reais.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
