Standard and Poors downgrades ArcelorMittal rating to junk

We are lowering the long- and short-term ratings on ArcelorMittal to BB/B from BBB-/A-3. The negative outlook reflects the uncertainty related to the extent of the companys planned near-term debt reduction as well as the weak steel environment, Samp;P said in a statement.

As per the rating criteria devised by Samp;P,BBB-rating is the lowest level for an investment grade rating and any thing below BBB level is considered as sub-investment grade.

In industry parlance,bonds with sub-investment grade are known as junk bonds and require attractive returns to sell. Announcing the results for June quarter,the worlds largest steelmaker had said that retaining the investment grade rating is its top priority. For the April-March quarter,ArcelorMittals gross earnings EBITDA,at 2.4 billion,was largely in line with the market expectations. Besides,it had a net debt of 22 billion at the end of the quarter.

However,Samp;P said that ArcelorMittals results for the April-June quarter were somewhat below our previous expectations,and we now forecast the companys credit ratios will remain weak.