Moody's cuts ArcelorMittal

Moody's Investors Service said it downgraded ArcelorMittal's Baa2 rating to Baa3 and assigned a stable outlook. The action concludes the review that began on April 7.

The action was prompted by the continued weakness in the steel markets and the effects this is expected to have on ArcelorMittal's leverage ratios, according to the agency.

"If prices for steel products remain at the current levels, or even if they improve somewhat in 2009 from these levels, Moody's expects a high double digit contraction in turnover in 2009 which will have a corresponding effect on the ArcelorMittal's ability to generate cash flows and profits," Matthias Hellstern, a Moody's analyst, said in a statement.

The Baa3 rating assumes that ArcelorMittal will be able to achieve its debt reduction target by year-end of additional $4.2 billion, the agency said.

ArcelorMittal's debt-to-EBITDA ratio is expected to improve to less than 3.5x.

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