Arab Today, arab today moody\s downgrades alcoa to junk status
Last Updated : GMT 18:20:30
Arab Today, arab today
Arab Today, arab today

Moody\'s downgrades Alcoa to junk status

Arab Today, arab today

Arab Today, arab today Moody\'s downgrades Alcoa to junk status

New York - AFP

Ratings firm Moody\'s on Wednesday announced it had cut the credit rating of US aluminum giant Alcoa by one notch to junk status, citing falling prices and weakening growth in China and Europe. Alcoa\'s rating on approximately $8.6 billion of debt was dropped to Ba1 from Baa3 but the rating outlook remained \"stable,\" Moody\'s said. The downgrade \"reflects our expectations that, despite Alcoa\'s success in reducing costs and improving productivity, continued headwinds pressuring fundamentals in the aluminum industry and aluminum prices... will continue to push out the time frame\" for the company to trim debt levels, the ratings firm said. Moody\'s said aluminum demand had grown about 7.0-7.5 percent from 2010 through 2012, but the price of aluminum has been falling since reaching post-recession highs in 2011. China\'s economic growth was slowing, to 7.7 percent in the first quarter, the ratings firm noted, while much of Europe remained in recession and there was a weakening manufacturing trend in the United States. \"While pockets of strength are evidenced, most notably in the automotive and aerospace industries, these are not viewed sufficient for a broad-based global recovery in the aluminum industry and significant profitability recovery,\" Moody\'s said. Alcoa said it was disappointed by the Moody\'s downgrade, but insisted the company had a strong balance sheet. \"We believe Moody\'s decision is a greater reflection of macroeconomic conditions and the volatility of metal prices than a true statement of the financial and operating strength of Alcoa,\" the New York-based company said in a statement. \"We remain committed to maintaining our investment grade rating and will continue to execute on our strategy and our 2013 goal of generating positive free cash flow.\" Alcoa shares fell 0.9 percent to $8.50 in post-market trade in New York. The Dow member had shed 0.1 percent as the Dow Jones Industrial Average closed 0.7 percent lower amid global economic growth concerns.

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