Moody’s has reaffirmed Usimina’s credit rating, highlighting the steel giant’s strong position in the Brazilian market.
The agency maintained its Ba2 corporate rating on Usiminas and its $750 million senior unsecured notes due 2026. Usiminas’ solid position in Brazil’s flat steel market supports this rating decision.
The company’s ability to quickly adapt operations to market conditions has impressed Moody’s analysts. They noted Usimina’s stable credit metrics and liquidity across economic cycles.
The steelmaker’s increased financial flexibility has allowed it to weather volatility in key markets. Moody’s praised Usiminas for avoiding cash burn and maintaining covenant compliance during challenging times.
This performance has reduced potential liquidity risks in difficult operating environments. As of June 2024, Usiminas boasted a strong cash position of R$5.6 billion ($1 billion).
This amount easily covers the company’s total reported debt by 0.9 times. Moody’s also noted Usimina’s favorable debt amortization plan, with no maturities until 2026.
The agency believes that Usimina’s normalized annual cash flow sufficiently covers non-discretionary expenses.
These include maintenance capital expenditures of approximately R$800 million ($143 million) and net interest payments of approximately R$200 million ($35 million). Dividend payments usually remain at the legal minimum of 25% of net income.
Usiminas secures stable credit rating: Moody’s affirms financial strength
Moody’s expects Usiminas to generate positive free cash flow despite recent weakness in the steel market.
The company’s capital expenditures for 2024 are forecast between $1.4 billion ($250 million) and $1.9 billion ($340 million).
This financial prudence supports Usimina’s credit quality during the ongoing crisis. The steelmaker’s commitment to financial discipline is evident in its strong cash position.
Moody’s anticipates that Usiminas will maintain a conservative approach to leverage and liquidity. Any future expansion investment is expected to be matched by internal cash generation.
Usimina’s ability to navigate market challenges while maintaining financial stability has impressed Moody’s.
The stable outlook reflects confidence in the company’s continued viability and strategic financial management in Brazil’s dynamic steel industry.
Usiminas secures stable credit rating: Moody’s affirms financial strength
