S&P assigns BB- to U.S. Steel notes

S&P said it affirmed its B corporate credit rating on U.S. Steel Corp. The outlook is negative.

At the same time, S&P assigned a BB- issue-level rating and 1 recovery rating to the company’s proposed $500 million senior secured notes, with proceeds earmarked to retire near-term debt maturities. The 1 recovery rating indicates very high (90%-100%) recovery in the event of a default.

S&P also affirmed the B issue-level rating on the company’s senior unsecured notes. The recovery rating on the notes remains 4, indicating an expectation of average (30%-50%; upper half of range) recovery in the event of a default.

“The negative outlook on United States Steel Corp. reflects our view that lower volumes and energy market weakness will negatively affect operational performance, weakening financial results over the next 12 months, or lead to a lower business risk profile assessment,” said S&P credit analyst William Ferara in a news release.

“We expect this weakness to result in strained key credit metrics, including adjusted EBITDA interest coverage of about 1.5x, debt to EBITDA of about 8.5x, and minimal free operating cash flow in 2016.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.