Moody's downgrades Severstal

Moody's Investors Service said it downgraded the Ba2 corporate family rating for Severstal, the Ba2 rating for the $375 million loan participation notes due 2014 and $1.25 billion loan participation notes due 2013 to Ba3.

The outlook is negative.

The downgrade reflects the anticipated weakening of the credit metrics of Severstal in the intermediate term driven by the weak steel markets affecting the company's operating performance and the significant operating challenges faced by the North American activities, according to the agency.

Moody's also said it acknowledges that Severstal is a solid competitor with a good cost position in Russia as well as good liquidity.

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