CSN's S&P outlook revised to positive

Monday, 12 October 2020 18:04:59 (GMT+3)   |   Sao Paulo

Credit rating agency Standard and Poor’s (S&P) has improved the outlook of Brazilian steelmaker Companhia Siderurgica Nacional (CSN) to positive from negative, noting the upgraded outlook reflects the company’s higher cash flow assumptions and the proposed mining IPO.

“High iron ore prices and the faster-than-expected recovery in domestic demand for steel will boost EBITDA of CSN, mitigating the impact of the domestic currency's sharp depreciation that's increasing the company's already high debt,” S&P said in a statement.

CSN has been trying to disinvest from non-core assets and has recently announced its plans to launch an IPO for its mining business, both as a way to reduce debt.

S&P noted “if successful,” the IPO “would accelerate debt reduction and fund investments to increase iron ore output in the next few years.”

“We estimate a record adjusted EBITDA (for CSN) close to BRL 8 billion ($1.4 billion) for this year, but to slip in the next few years following the iron ore price curve. The company will also post robust free operating cash flow (FOCF) due to lower capex and strong working capital release, used mostly to pay down debt,” the credit agency estimated.

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