S&P Afirms Global Scale, Brazil National Scale Ratings on Gerdau SA (GGB)

Standard & Poor's Ratings Services affirmed its 'BBB-' global scale and 'brAAA' Brazil national scale ratings on Gerdau SA (NYSE: GGB) (Gerdau). We also affirmed our 'BBB-' rating on Gerdau Ameristeel Corp., Gerdau's U.S. subsidiary. The outlooks on all the ratings remains stable.

The ratings affirmation reflects Gerdau's geographic diversification, efficient operation, and its wide scope of products and end markets, which have resulted in resilient margins and cash flows despite weaker demand for steel products in Brazil and a more competitive environment in the U.S. amid high supply and inventory levels. We also view Gerdau's "strong" liquidity position, smooth debt amortization profile, and a large operation outside Brazil as key factors for the company to potentially have a higher rating than the foreign currency rating on Brazil (BBB-/Negative/A-3).

The diversified products and markets, its partly integrated steel operation with iron ore and coking coal production, and competitive advantages in scrap sourcing and long-term relationship with clients underpin our assessment of Gerdau's business risk profile as "satisfactory."

The weaker macro scenario and significant devaluation of the Brazilian real have taken a toll on Gerdau's leverage metrics because 75% of its unadjusted debt is dollar denominated.

You May Also Be Interested In

• Evercore ISI Upgrades First Solar (FSLR) to Outperform
• Bowlero Corp. (BOWL) PT Lowered to $19 at Stifel
• Evercore ISI Comments on Tractor Supply Company (TSCO) Ahead of Earnings