S&P lowers Severstal Columbus view to stable

Standard & Poor's said it revised the outlook on Severstal Columbus LLC to stable from positive.

The B long-term corporate credit rating also was affirmed.

The outlook revision follows the company's weaker performance in the third quarter of 2012 than the previous quarter, amid unfavorable industry conditions, S&P said.

This has led to a conclusion that the company's free operating cash flow will remain negative in 2012, preventing debt reduction, the agency said.

S&P said it forecasts leverage to remain very high with the adjusted debt-to-EBITDA ratio at about 10x and EBITDA-to-interest at about 1x.

OAO Severstal indirectly owns 100% of Severstal Columbus, the agency said.

The ratings reflect an anticipation of continued support for Severstal Columbus from OAO Severstal, S&P said.

The agency also said it expects Severstal Columbus to show an improvement of its EBITDA generation and metrics once steel demand in the United States recovers, although this may take longer than previously anticipated.

The ratings also consider the company's limited debt maturities over the next several years, S&P added.

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