On Feb. 26, 2009, Standard&Poor's Ratings Services placed its 'BBB-' corporate credit rating on Brazil-based steel company Gerdau S.A. on CreditWatch with negative implications. The action reflects our expectation that Gerdau will experience weaker performance in 2009. The CreditWatch placement reflects the significant deterioration in Gerdau's profitability and cash generation due to the adverse economic conditions, especially in North America and Brazil's export markets. We think the worldwide economic turmoil will continue throughout the year, making it more difficult for the company to deleverage. This, in turn, makes it harder to reconcile Gerdau's credit metrics with the current rating category. Although market conditions have remained particularly volatile and uncertain since fourth-quarter 2008, Gerdau will face an even more
