Bulletin: Gerdau S.A. Ratings Not Affected By Weaker Third-Quarter Metrics And Parent's Share Sales Announcement

SAO PAULO (Standard&Poor's) Oct. 30, 2015--Standard&Poor's Ratings Services said today that its ratings and outlook on Gerdau S.A. (global scale: BBB-/Stable/--; national scale: brAAA/Stable/--) are not affected by the weaker credit metrics the company reported for the third quarter of 2015. Though Gerdau has faced weak demand mainly in its Brazilian steel business, the major drag on its metrics was the impact of the depreciated Brazilian real on the company's dollar-denominated debt, which accounts for more than 75% of its reported debt. As a result, Gerdau's adjusted debt to EBITDA rose to 4.7x and funds from operations to debt to 15% as of Sept. 30, 2015, from 3.8x reported by the company (we consolidate the debt

...SAO PAULO (Standard & Poor's) Oct. 30, 2015--Standard & Poor's Ratings Services said today that its ratings and outlook on Gerdau S.A. (global scale: ###-/Stable/--; national scale: brAAA/Stable/--) are not affected by the weaker credit metrics the company reported for the third quarter of 2015. Though Gerdau has faced weak demand mainly in its Brazilian steel business, the major drag on its metrics was the impact of the depreciated Brazilian real on the company's dollar-denominated debt, which accounts for more than 75% of its reported debt. As a result, Gerdau's adjusted debt to EBITDA rose to 4.7x and funds from operations to debt to 15% as of Sept. 30, 2015, from 3.8x reported by the company (we consolidate the debt of the parent, Metal·rgica Gerdau, [MG], into Gerdau's numbers and adjust for pension liabilities). Although the third-quarter results reflect a sharp impact of the weaker real's on the dollar-denominated debt, it doesn't capture the full benefit of dollar-denominated revenues...

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