The Fitch rating agency lowered the rating of Brazilian steel producer CSN from "BB+" to "BB-", which analysts attribute to the significant financial leverage of the company.
Benjamin Steinbruch, CEO and controlling shareholder, recently announced an initiative to sell some or all of the company's steel operations in order to reduce the group's financial leverage. The company's net financial debt is currently estimated at $7.1 billion, which is 3.14 times higher than EBITDA.
Without mining activities, the group's financial arm would have reached 13.7 times EBITDA, underscoring the region's crucial role in generating cash.
No official contracts have been signed with banks, but investment banks are reportedly competing to coordinate sales of steel, iron ore, cement and CSN infrastructure.
Reports show that Steinbruch has set guidelines for banks: in addition to providing advisory services during the sale, they should also provide CSN credit lines to offer short-term financial assistance and improve liquidity.
