S&P puts Steel Dynamics on watch

Standard & Poor's said it placed its ratings, including its BB+ corporate credit rating, on Steel Dynamics Inc. on CreditWatch with negative implications.

The agency said the CreditWatch listing reflects the company's weak operating performance as a result of the steel industry's poor end-market demand and low utilization rates, a trend that S&P expects will continue throughout 2009 and likely cause Steel Dynamics' credit measures to deteriorate to a level considered weak for the current rating.

S&P said it is also concerned that the company may breach the leverage covenant governing its existing bank credit facility, which requires it to maintain a debt-to-EBITDA ratio of less than 5 times - although the agency's current expectation is that the company will obtain relief from its banks.

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