Credit rating agency Fitch Ratings has assigned a BBB-(EXP) rating to the proposed benchmark-sized senior unsecured bonds of Brazilian steelmaker Gerdau due in 2027 and to be issued by Gerdau Trade Inc. Fitch said the rating outlook is stable.
The bonds will be unconditionally and irrevocably guaranteed by Gerdau and some of its main operating companies based in Brazil. The proceeds from the bond will be used for debt refinancing.
“Gerdau's ratings reflect its sustained ability to generate robust positive free cash flow through economic and commodity cycles. The company's strong geographic diversification, flexible business model, and well-developed network of scrap procurement, coupled with a track record of conservative financial management, further support Gerdau's investment-grade ratings,” Fitch said.
The agency said key rating drivers for the company are geographical diversification, production flexibility, and high leverage with a declining trend. Fitch also said an asset sale is likely.