Tags:
Journalism of Courage
Rating agency Standard and Poors (S&P) has cut its ratings for ArcelorMittals debt to junk status as it feels that there is uncertainty over worlds largest steelmakers debt reduction plans.
It also indicated that ratings of ArcelorMittal may get reduced further depending upon the global steel environment,which it says remains weak.
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, S&P said in a statement.
As per the rating criteria devised by S&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,S&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.
