Chile Earthquake Undermines CAP Rating

The recent Chilean earthquake could dent the BBB minus rating of steel producer CAP, says Fitch, which notes severe damage at its CSH subsidiary. “The company estimates that the repair work required to produce steel at normal capacity will take at least 3 months, which could apply downward pressure on existing ratings on the back of difficult trading conditions already experienced during 2009,” says Fitch. It adds that steel rolling lines were not largely affected, and CAP also has insurance policies expected to cover a substantial part of the repair work. Fitch awaits further information to assess the impact of the disaster on the credit profile of CAP. It adds that CAP has a comfortable liquidity position with cash and equivalents of $387m as of end 2009 and a low amortization schedule for the next 12 months totaling $45m.