03 AUGUST 2010AL CIRCLE
New Credit Rating: Alcoa
Edited by : AL CIRCLE
1 min read
Morningstar is initiating credit coverage of Alcoa AA with an issuer rating of BB+. Alcoa is one of the largest independent aluminum producers in the world. Its expansion in low-cost production--particularly in Brazil and Saudi Arabia--helps usher the company into a mid to low tier on the global cost curve, solidifying its global leadership position in alumina, primary aluminum, and fabricated aluminum products. However, its highly leveraged balance sheet, large dependence on financial markets for funding needs, large unfunded pension and healthcare liabilities, and its volatile end markets offset its operational strength. We feel this is ultimately detrimental to its credit quality.
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