S038;P downgrades ArcelorMittal

Samp;P downgraded long-and short-term ratings of ArcelorMittal,the rating agency said today.

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On the back of the weak European economic environment coupled with sluggish steel demand globally,rating agency Samp;P today downgraded the long-and short-term ratings of ArcelorMittal,the rating agency said today.

8220;We are lowering the long-and short-term ratings on ArcelorMittal to 8216;BB/B8217; from 8216;BBB-/A-38217;,8221; the agency said,adding the outlook is negative on the back of prevailing environment.

It also said the downgrade reflects the weaker steel industry environment and economic prospects globally,and particularly in Europe,which has led to downward revision of ArcelorMittal8217;s profits for the rest of 2012 and 2013.

According to the report,purchasing manager indices have weakened,which is likely to translate into lower steel demand in 2012-13.

8220;Furthermore,the 20 percent decline in steel and raw material prices over the past two months indicates that the industry environment is currently weaker than we previously expected,8221; it said.

The rating agency,however,said the world8217;s largest steel company8217;s business risk profile remained satisfactory and financial risk profile as 8216;significant8217; as it met the criteria of Samp;P.

ArcelorMittal generated 20 percent of its operating profit in Europe in 2011,17 percent in North America,33 percent from emerging markets. Referring to liquidity situation in the company,Samp;P said it is satisfactory.

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8220;We continue to assess ArcelorMittal8217;s liquidity as 8216;adequate8217; under our criteria. We estimate that the ratio of sources of liquidity to uses is above 1.2x for the next 12 months,8221; it said.

The rating agency also said that group8217;s bonds and key bank facilities don8217;t contain rating triggers. Earlier,another rating agency Fitch has said despite a slowdown in growth of steel demand,outlook for the Fitch-rated domestic steel producers will remain stable in the second half of the current financial year.

As per the rating agency,demand for steel in the country is likely to be in the range of 6-7 percent in 2012,with the higher activity during post-monsoon period.