Credit rating agency Moody's America Latina has downgraded this week both the national and global ratings of Brazilian steelmaker Companhia Siderurgica Nacional (CSN).
CSN’s global scale ratings were downgraded to Caa2 from Caa1, while the company’s national scale ratings went to Caa2.br from B3.br. The steelmaker’s outlook remained negative, Moody’s said.
“The downgrade reflects the tight liquidity position faced by CSN, which is exacerbated by the fact that CSN has not yet filed audited financial statements for fiscal year 2016 and our concern about potential liquidity pressures that could arise as a consequence,” the credit rating agency said.
As previously reported by SteelOrbis, CSN’s failure to file its financial statements on time was hindering the company’s ongoing talks with creditors to pursue its financial obligations and step away from a potential default
“CSN has been working with creditors which have notified the company and has obtained waivers from them accommodating the delay. An extended delay carries the risk that creditors could take actions that lead to a declaration of technical default, followed by payment acceleration after the relevant cure period under the particular agreement,” Moody’s noted.
The credit ratings agency also said CSN’s credit metrics will “slowly” recover in the next 12 to 18 months, as well as its “unsustainable capital structure.”
“The company will need to rely either on asset sales, a capital increase or a debt refinancing to reduce debt levels,” the agency suggested.