31 MAY 2013Presstv.ir
Alcoa downgraded to junk status in ratings
Edited by : AL CIRCLE
1 min read
Ratings agency Moody's Investors Service has downgraded US aluminum giant Alcoa by one notch to junk status due to falling prices and slow growth in China and Europe.
Moody's on Wednesday cut Alcoa's senior unsecured debt and corporate family ratings to Ba1 from Baa3.
It, however, said the company’s rating outlook remained stable and confirmed its Ba2 preferred stock rating. The decision "reflects our expectations that, despite Alcoa's success in reducing costs and improving productivity, continued headwinds pressuring fundamentals in the aluminum industry and aluminum prices... will continue to push out the time frame" for the company to reduce debt levels, the ratings firm said.
Moody's said aluminum demand had risen about 7.0-7.5 percent from 2010 through 2012, but the price of the metal has dropped since a rise in 2011.
"While pockets of strength are evidenced, most notably in the automotive and aerospace industries, these are not viewed sufficient for a broad-based global recovery in the aluminum industry and significant profitability recovery," Moody's said.
Moody's on Wednesday cut Alcoa's senior unsecured debt and corporate family ratings to Ba1 from Baa3.
It, however, said the company’s rating outlook remained stable and confirmed its Ba2 preferred stock rating. The decision "reflects our expectations that, despite Alcoa's success in reducing costs and improving productivity, continued headwinds pressuring fundamentals in the aluminum industry and aluminum prices... will continue to push out the time frame" for the company to reduce debt levels, the ratings firm said.
Moody's said aluminum demand had risen about 7.0-7.5 percent from 2010 through 2012, but the price of the metal has dropped since a rise in 2011.
"While pockets of strength are evidenced, most notably in the automotive and aerospace industries, these are not viewed sufficient for a broad-based global recovery in the aluminum industry and significant profitability recovery," Moody's said.
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