Nucor currently has an investment-grade rating from both Moody"s and S&P; a downgrade by either agency would cost Nucor hundreds of millions of dollars in additional financing costs, which is exactly what would happen if it issued $3 billion in debt. As an alternate course of action, the management at Nucor issued only $1 billion and will seek the balance via its first equity issue in a century.

We"re talking, here, about a company that is both profitable and stable. A company in an industry with a growing demand for its product. A company that has survived the great depression for goodness sake! Do the rating agencies really believe that the extra debt will result in a default or worse? The truth is more likely that they are reeling from their comedy of errors over the past year and are now more cautious than ever in issuing their credit ratings. Is that fair to the companies that have had no role in the credit crisis and, moreover, have absolutely no exposure to its consequences? ...well, I suppose we just proved that they do have "some" exposure.

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3.23 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."