Moody’s Sees Magnesita Covenant Pressure

Moody’s has downgraded Magnesita’s corporate family ratings to Ba3 from Ba1 on the global scale and to A3.br from Aa2.br on the Brazilian scale. The ratings remain under review for possible further downgrade. The cut reflects Magnesita’s leverage, which by total adjusted net debt to Ebitda, was above 4.5x as of December 31. “We believe that its performance in the first 3 months of 2009 remained weak due to lingering unfavorable market conditions for the global steel industry that traditionally represents about 70% of refractories consumption worldwide, thus placing further pressure on certain of its financial covenants,” Moody’s says.