Moody's upgrades Russel Metals

Moody's Investors Service said it upgraded its ratings for Russel Metals Inc., raising its senior implied rating to Ba2 from Ba3, and assigned a Ba3 rating to the company's proposed US$175 million offering of senior unsecured notes due 2014.

Ratings upgraded include Russell's senior implied rating to Ba2 from Ba3, senior unsecured issuer rating to Ba3 from B1, C$254 million senior secured revolver maturing June 2005 to Ba1 from Ba2, US$115.6 million of 10% guaranteed senior unsecured notes due 2009 to Ba3 from B1, C$30 million of 8% subordinated debentures due 2006 to Ba3 from B1, and C$30 million of 7.5% cumulative redeemable preferred shares to B2 from B3.

The outlook is stable.

Moody's said the rating upgrades reflect the company's solid competitive position in the Canadian metal service center industry, a history of stable cash flow throughout a full economic cycle, discerning and superior management, and relatively low leverage. The long-term ratings also acknowledge the counter-cyclical nature of Russel's working capital needs and its good liquidity.

The ratings are constrained by the sensitivity of Russel's financial performance to general economic conditions and its dependence on cyclical end-use industrial sectors such as manufacturing, construction, transportation, and energy.

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