On Sept. 1, 2005, Standard&Poor's Ratings Services assigned its 'BB-' foreign currency and 'BB+' local currency corporate credit ratings to Brazil-based steelmaker Gerdau S.A. (Gerdau). The outlook is stable. The ratings reflect Gerdau's exposure to the volatile and cyclical commodity long steel industry, which is peculiarly vulnerable to import competition in North America and to demand swings in Brazil; an acquisitive growth strategy that may cause some peaks of financial leverage in the future (despite the current very comfortable liquidity and debt profiles); and a heavy capital budget in the next three years ($3.2 billion) aimed at both brownfield and greenfield capacity expansions. These negatives are partly mitigated by Gerdau's adequate geographic diversification through the Americas, with very
