Credit rating agency Standard & Poor's (S&P) said this week it has upgraded the global scale ratings of Brazilian flats steelmaker Usiminas to B from B- on improving market conditions.
S&P said profitability at the flats producer will continue to support “stronger operating cash flow generation” over the next few quarters, resulting in “further declining leverage.
Usiminas national scale ratings also improved to brBBB from brBB. The credit rating agency said the steelmaker’s outlook remains “positive.”
S&P said the company’s “quickly improving financial metrics” will be supported by growing flat steel demand, higher iron ore output from subsidiary MUSA, and the company’s focus on reaching a higher margin product mix and lean operations to optimize cash generation.
“As operations continue to improve, we expect Usiminas to pay debts as they come due and according to the cash sweep mechanism in its debt restructuring agreement—meaning that the company will use all cash generated in the year to prepay future amortizing debt, which will further improve metrics,” the agency noted.