Fitch revises Alcoa watch to evolving

Fitch Ratings said it revised the Rating Watch on Alcoa Inc. to evolving from positive.

The company’s AA ratings reflect weak market conditions in the upstream businesses and slow growth in the value-add businesses, resulting in total-debt-to-EBITDA ratio expected to exceed 3x, the agency said.

In September 2015, the company’s board approved a plan to separate into two independent, publicly traded companies, Fitch said.

The transaction is intended to qualify as a tax-free transaction and it is expected to be completed in the second half of 2016, the agency said.

There will be an upstream company called Alcoa and a value-added company called Arconic, Fitch said.

The Rating Watch was revised to evolving from positive due to expectations that the separation may not result in investment-grade credit metrics at the value-added company, Fitch said.

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