MRO Magazine

Fitch: 10 Most Distressed LatAm Corporates; Debt Restructuring May Be Unavoidable for CSN


February 2, 2016
By Business Wire News

NEW YORK

Link to Fitch Ratings’ Report: Companhia Siderurgica Nacional—Scenario Analysis (The Next Giant to Fall?)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876887

It is unlikely Companhia Siderurgica Nacional (CSN) will achieve free cash flow neutrality through asset sales, heightening risk of a debt restructuring within the next 24 months, according to the latest report in Fitch’s 10 report series: “10 Most Distressed LatAm Corporates.”

One report will be released each day through Feb. 12th per the schedule found at end of this release.

“Negative pressures on CSN’s cash flow are not expected to abate in 2016. If iron prices average USD45 per ton, we are looking at the need for asset sales of around BRL2.0 billion for the company to be free cash flow neutral in 2016,” said Phillip Wrenn / Associate Director. “But we believe monetizing assets in this environment will be extremely challenging.”

Unprecedented market conditions including the sharp drop in iron ore prices, collapse in Brazilian steel demand, and rising benchmark interest rates impacted CSN’s credit profile and contributed to the deterioration of the company’s credit profile.

Fitch’s 10 Most Distressed LatAm Corporates series will be released one report per day as follows:

Feb. 1st: Samarco Mineracao S.A.

Feb. 2nd: Companhia Siderurgica Nacional

Feb. 3rd: Pacific Exploration and Production Corporation

Feb. 4th: GOL Linhas Aeresas S.A.

Feb. 5th: Oi S.A.

Feb. 8th: GeoPark Latin America Limited Agencia en Chile

Feb. 9th: Ajecorp B.V.

Feb. 10th: TV Azteca, S.A.B. de C.V.

Feb. 11th: QGOG Constellation S.A.

Feb. 12th: Odebrecht Offshore Drilling Finance Ltd.

For more information, a special report titled “Companhia Siderurgica Nacional—Scenario Analysis” is available on the Fitch Ratings web site at www.fitchratings.com.

Additional information is available at ‘www.fitchratings.com‘.

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Fitch Ratings
Primary Analyst
Phillip Wrenn
Associate Director
Fitch Ratings, Inc.
70 W Madison St
Chicago, IL 60602
+1-312-368-2075
or
Secondary Analyst
Debora Jalles
Director
+1-312-606-2338
or
Media Relations:
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com