S&P gives negative outlook for ArcelorMittal

S&P Global Ratings affirmed its BBB credit rating for the world's largest steelmaker ArcelorMittal with a negative outlook amid continued pressure from weak market conditions. However, the rating agency said that the growth in demand for steel is already behind.

"Manufacturing in Europe and the US is halting due to the COVID-19 pandemic, which resulted in an unprecedented drop in steel demand in April, while demand is likely to remain uncertain for the rest of the year," S&P Global Ratings said in a statement. on Monday.

The agency said it has revised down its expectations for ArcelorMittal's financial performance for the remainder of the year due to a “drop” in steel demand in the current quarter, assuming an underlying EBITDA of less than $ 4 billion. USA (instead of the estimated 5.8–6.3 billion USD). early February).

S&P Global Ratings released its statement shortly after ArcelorMittal announced that it has begun raising nearly $ 2 billion in capital, mainly to accelerate the reduction of its net debt - at $ 10 billion as of March 31 - to its target. $ 7 billion. The Mittal Family Foundation will participate in fundraising with a $ 200 million investment.

Debt reduction is "a clear priority to bolster credit performance and maintain a foundation for consistent future return for shareholders," the steelmaker said in a statement Monday. "Today's deal complements the progress made in recent years to make ArcelorMittal more resilient to a challenging environment, as well as recent efforts to address the business impact of COVID-19."

The rating agency said the $ 2 billion in capital raising, along with an ongoing $ 2 billion asset sale program and other initiatives, should help reduce net debt by about $ 3 billion in 2020 and another $ 2 billion in 2021.

“ArcelorMittal uses a variety of financial policy levers to manage the industry crisis and minimize the impact on its operations and financial results,” S&P Global Ratings said. "Rating pressures remain high as in our base case the company's credit performance is likely to be below the rating threshold for three consecutive years."

The negative outlook reflects a potential one notch decline to 'BB +' over the next three to 12 months if very weak conditions in the steel market persist and the company is unable to liquidate, it said.

According to S&P Global Ratings, the weak conditions for the steel industry in 2019 worsened in 2020, "but the trough is behind."

According to the rating