S&P lowers U.S. Steel, notes to B

Standard & Poor's said it lowered its corporate credit rating on U.S. Steel Corp. to B from BB-.

The outlook is negative.

At the same time, the agency lowered its issue-level rating on the company's senior unsecured notes to B from BB-. The recovery rating was revised to 4 from 3, indicating an expectation for average (30% to 50%; upper half of the range) recovery in the event of payment default.

"The negative outlook on U. S. Steel Corp. is based on our expectation that weakness in the steel market will persist over the next 12 months, continuing to weigh on operating performance," S&P credit analyst William Ferara said in a news release.

"This weakness is expected to result in strained key credit measures, including adjusted debt to EBITDA of about 10x, EBITDA interest coverage of roughly 1.25x, and minimal free operating cash flow in 2016. Although we expect the company's liquidity position will remain exceptional, we recognize that the company's cash balance could decline in 2016, reducing a key source of liquidity unless steel market conditions and prices improve."

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