S&P rates International Steel

Standard & Poor's said it assigned its BB rating to International Steel Group Inc.'s proposed $600 million senior unsecured notes due 2014 and affirmed its BB corporate credit rating and BB+ senior secured bank loan rating on the company.

The outlook is positive.

Proceeds from the proposed notes offering will be used to refinance International Steel's term loan B and for general corporate purposes. Among other potential uses, the transaction will provide cash liquidity to allow International Steel to fund its proposed $255 million acquisition of bankrupt Weirton Steel Corp., which remains subject to approval by the U.S. Bankruptcy Court and satisfaction of other customary conditions.

S&P said the ratings on International Steel reflect its leading market position in the highly cyclical and competitive North American steel industry, its competitive cost position, and moderate financial policies.

Despite improved conditions of late, the North American steel market remains challenged by the limited availability of key raw materials, such as iron ore, scrap and coke, mainly because of China's insatiable demand for these and other materials from the global market. This has resulted in unprecedented increases in the costs of these materials and put significant pressure on the margins of steel companies.

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