S&P upgrades Usiminas

S&P said it raised the global scale corporate credit ratings on Usinas Siderurgicas de Minas Gerais SA (Usiminas) to CCC+ from SD (selective default).

The agency also said it raised the national scale rating on the company to brCCC+ from SD.

S&P also said it raised the rating on the company's debentures, which after the debt restructuring are now senior secured debt, to brCCC+ from brC.

The rating on the debentures is at the same level as the corporate rating, reflecting a recovery rating of 4, indicating 30% to 50% expected default recovery.

S&P also said it raised the rating on the company’s senior unsecured notes to CCC- from C, reflecting the 6 recovery rating of 6, which indicates 0 and 10% expected default recovery.

The outlook is negative.

The upgrades follow the completion of the company's debt restructuring, which overhauled about 92% of the company’s debt that will now start to amortize only in 2019, the agency said.

This, along with the capital injection of R$1 billion from the company's shareholders, Nippon and Ternium, and the easing of financial covenants, improved the company’s liquidity position, S&P explained.

Still, cash shortfalls still pressure the company’s ability to pay entirely its bond due January 2018, the agency said.

The ratings also reflect the company’s weak operating efficiency and reduced volume output, along with soft market demand and high interest burden, S&P said.

© 2015 Prospect News.
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