Credit ratings agency Fitch has affirmed the long-term ratings of Brazilian steelmaker Gerdau at BBB-, and the company’s national scale ratings at AAA (bra), on a stable outlook.
Fitch said Gerdau’s investment-grade ratings are due to the company’s “consistent commitment to a sound capital structure and its flexible operating structure of electric arc furnace (EAF) steel production spread across the Americas that allow it to respond to changing market conditions,” the agency report said.
Fitch said Gerdau would be less affected by Covid-19 than “many peers” as 75 percent of Gerdau’s sales in 2020 were long steel products, “which have not been as impacted as flat steel.”
“Falling prices for scrap steel and a weaker Brazilian real will lower Gerdau's cost structure during 2020,” Fitch said, adding such benefits would compensate weaker sales volumes in the ongoing year.
The Brazilian was compared to ArcelorMittal in terms of credit metric, however, Gerdau’s margins were considered by Fitch “higher” and with a “smoother maturity schedule.”