Moody’s upgrades Ryerson

Moody’s Investors Service said it upgraded Ryerson Holding Corp.’s corporate family rating to B2 from B3 and its probability of default rating to B2-PD from B3-PD. Moody’s also raised the senior secured rating for Ryerson Inc. to B3 from Caa1. Ryerson’s speculative grade liquidity rating was changed to SGL-2 from SGL-3.

“The upgrade of Ryerson’s ratings reflects the significant improvement in the company’s operating performance and credit metrics due to its use of free cash flow to pay down debt. The upgrade incorporates the expectation the deleveraging trend will continue over the next 12 to 18 months,” said Michael Corelli, a Moody’s vice president, senior credit officer and lead analyst for Ryerson, in a press release.

Ryerson’s performance improved in 2019 driven by higher LIFO income from a steep decline in carbon steel product prices after they reached a 10-year high in July 2018. LIFO income was $62.6 million during the first nine months of 2019 compared with a LIFO expense of $89.3 million during the same period in 2018. Ryerson’s adjusted EBITDA increased significantly, and its cash flows also strengthened due to a smaller working capital investment. The company used its free cash flow to pay down a portion of the funds it borrowed to complete the $164 million acquisition of Central Steel & Wire in July 2018, Moody’s said.

The outlook is stable.

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