S&P drops ArcelorMittal, debt to BB

Standard & Poor's said it lowered its long-term corporate credit rating on ArcelorMittal to BB from BB+.

The outlook is stable.

The agency also lowered its issue rating on the group's senior unsecured debt to BB from BB+. The recovery rating remains unchanged at 4, reflecting expectations of average (30%-50%) recovery prospects in the event of a payment default.

ArcelorMittal’s B short-term corporate credit rating was affirmed.

S&P said the downgrade reflects its assumption that the group is unlikely to achieve and sustain credit metrics that it sees as consistent with a higher rating following the downward revision of its iron ore price assumption to $65 per ton in 2015 and 2016.

Specifically, the agency forecasts funds from operations (FFO) to debt of about 16%, rather than trending toward 20%, as it anticipated in its November 2014 base case. S&P now projects EBITDA for 2015 at $7 billion to $7.3 billion – below the previous expectation of $8 billion.

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