By Brazil Stock Guide – Moody’s downgraded Companhia Siderúrgica Nacional (CSNA3) to Caa1 from B2, keeping a negative outlook, in another sign of growing pressure on the Brazilian steelmaker’s capital structure.
The ratings agency said CSN’s credit metrics remain weak, liquidity risks are high and the company may need to pursue refinancing transactions that Moody’s could view as distressed exchanges. The downgrade also applied to backed senior unsecured notes issued by CSN Resources and CSN Inova Ventures.
CSN raised $1.2 billion through a bridge loan in April to reinforce liquidity while it works on asset sales. But Moody’s said the transaction provides short-term breathing room rather than a solution to the company’s main problem: high leverage, continued cash burn and a large refinancing wall.
The company announced in January that it planned to sell a minority stake in infrastructure assets and a majority stake in its cement business, targeting proceeds of R$15 billion to R$18 billion. The money is expected to be used to reduce debt at the holding-company level, lower interest costs and improve capital allocation across the group.
The pressure is visible in cash flow. CSN reported negative free cash flow of R$1.5977 billion in the first quarter of 2026, equivalent to an average cash burn of about R$533 million per month. The company cited weaker seasonal operating performance, working capital consumption, high financial expenses and significant debt amortization during the quarter.
On an adjusted basis, CSN’s free cash flow was negative by R$520.4 million in the quarter, or roughly R$173 million per month. That measure excludes some effects, but it still shows that the bridge loan did not change the underlying issue: CSN needs to reduce debt and improve recurring cash generation.
Moody’s said CSN had R$13.4 billion in consolidated cash at the end of March, including R$8.8 billion at the mining subsidiary. After the bridge loan, available liquidity rose to R$18.6 billion. Still, the company faces R$28.6 billion in debt maturities through 2028, while free cash flow is expected to remain negative under current expansion and dividend plans.
CSN’s adjusted EBITDA slipped to about R$8.8 billion in the 12 months ended March 2026 from R$8.9 billion in 2025. Moody’s-adjusted leverage declined to 5.8 times from 6.1 times, but the agency expects the ratio to remain between 5.5 times and 6.5 times over the next 12 to 18 months, pressured by lower steel and iron ore prices.
The company’s structure adds another complication. Moody’s said most of CSN’s debt sits at the holding-company level, while most cash generation comes from the mining subsidiary. That mismatch limits flexibility and increases the urgency of asset sales or other deleveraging measures.
The new downgrade follows earlier rating actions by Fitch, S&P and Moody’s Local in 2026. For investors and creditors, CSN’s asset-sale plan is no longer just a strategic option. It has become the central test of whether the company can stabilize its balance sheet before refinancing pressure forces tougher choices.