Usiminas Secures Stable Credit Rating: Moody’s Affirms Financial Strength

Moody’s has reaffirmed Usiminas’ credit rating, highlighting the steel giant’s robust position in Brazil’s market.

The agency maintained the “Ba2” corporate rating for Usiminas and its $750 million senior unsecured notes due in 2026. Usiminas’ solid standing in Brazil’s flat steel market underpins this rating decision.

The company’s ability to swiftly adjust operations to market conditions has impressed Moody’s analysts. They noted Usiminas’ consistent credit metrics and liquidity across economic cycles.

The steel producer’s enhanced 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 sum comfortably covers the company’s total reported debt by 0.9 times. Moody’s also noted Usiminas’ favorable debt amortization schedule, with no maturities until 2026.

The agency believes Usiminas’ normalized annual cash flow sufficiently covers non-discretionary expenses.

These include maintenance capital expenditures of about R$800 million ($143 million) and net interest payments of roughly R$200 million ($35 million). Dividend payments typically 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 steel market weakness.

The company’s 2024 capital expenditure is projected between R$1.4 billion ($250 million) and R$1.9 billion ($340 million).

This financial prudence supports Usiminas’ credit quality during the ongoing crisis. The steel producer’s commitment to financial discipline is evident in its strong cash position.

Moody’s anticipates Usiminas will maintain a conservative approach to leverage and liquidity. Any future expansion investments are expected to align with internal cash generation.

Usiminas’ ability to navigate market challenges while maintaining financial stability has impressed Moody’s.

The stable outlook reflects confidence in the company’s continued resilience and strategic financial management in Brazil’s dynamic steel industry.

Usiminas Secures Stable Credit Rating: Moody’s Affirms Financial Strength

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