Usiminas’s Restructuring Gets Split Verdict at Rating Companies

  • Fitch downgraded the steelmaker minutes before S&P upgraded
  • Usiminas said it concluded debt renegotiation this month

The conclusion of a debt renegotiation at Brazilian steelmaker Usinas Siderurgicas de Minas Gerais SA is dividing ratings companies.

Just minutes after Fitch Ratings cut its rating to restricted default Wednesday, S&P Global Ratings lifted the company out of selective default to the still-terrible-but-slightly-better level of CCC+. Bond investors didn’t provide an immediate verdict on who was right, with no additional trades after the ratings companies’ moves on the steelmaker’s $180 million of notes due in 2018, which had climbed 0.39 cent to 86.4 cents on the dollar.

Fitch’s concern is that the restructuring was done in such a way that holders of the dollar-denominated bonds could declare an event of default. For its part, S&P said the restructuring -- along with a capital injection the company received -- have improved liquidity and its capital structure.

Earlier this month, Usiminas said it had concluded a debt renegotiation with Brazilian and Japanese lenders, putting an end to a restructuring process with companies that hold 92 percent of its debt. The terms included a time frame of 10 years for payment, and a three-year grace period before the payment of principal. The company has been dogged by lower commodity prices, Brazil’s worst recession in a century and a long-running battle among shareholders.