Moody’s Takes Shine off Voto, Gerdau, CSN

Moody’s has revised the outlook to stable from positive on Votorantim Participacoes, Gerdau and CSN. For Voto, the action reflects the sharply declined prices and demand for all commodities produced by the group in the recent months, although Moody’s expects the impact on revenues and cash flows will be partially offset by the recent devaluation of BRL. “While the cement operations in North America have been negatively affected by the sub-prime crisis since the second half of 2007, we expect the performance of the cement business in Brazil will remain fairly robust during the first half of 2009 supported by the existing construction backlog,” says the agency. “However, we expect a declining demand for cement in Brazil thereafter due to an anticipated slowdown in the construction activity partly from reduced credit availability.” Voto is rated Baa3. For Gerdau, Moody’s notes rapid deterioration in steel industry conditions globally and expectations for weakened debt protection metrics for Gerdau and Ameristeel over the near term. “The current downturn goes beyond typical cyclical downturns given the underlying severity of the distress in the global financial markets,” says Moody’s. Gerdau is rated Ba1. Steelmaker CSN’s Ba1 outlook was also cut to stable from positive.