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Moody's upgrades BlueScope Steel's credit ratings to Ba2, outlook stable

Moody's on April 8 upgraded BlueScope Steel Ltd.'s credit rating to Ba2 from Ba3, withthe outlook changed to stable from positive.

The upgrade reflects the company's strengthening financial profilein the past two to three years as it benefits from its production of branded value-addedproducts and from low raw material costs, relative to the price of its finishedproducts, Moody's said.

"The company is also now reaping the benefits of restructuringand cost-cutting initiatives. … These positive factors are offsetting the effectsof a difficult global environment for steel producers," commented Matthew Moore,a Moody's vice president and senior credit officer.

Further driving the upgrade is the consideration that the company'sfinancial leverage positions it within the Ba2 rating parameters.

In addition, the ASX-listed company's positive results for the first half of its fiscal 2016 extendthe improving trend for its credit metrics, which has been underway since 2013.

Despite volatility in the global steel market, BlueScope's commitmentto further de-leveraging highlights the rating agency's view that it will sustaina financial profile consistent with the rating.

The sustainability is expected to deliver savings of about A$270million per annum in Australia, and NZ$50 million in New Zealand.

"BlueScope's ratings continue to reflect the company's improvedperformance in Australia, geographic diversification, and the steps taken to strengthenits business profile by focusing on midstream and downstream products," Moody'snoted.

As of April 8, US$1 isequivalent to NZ$1.47.