At current aluminum prices, Alcoa’s cashflow and debt are “well outside our expectations” for the company’s BBB- corporate credit rating, Standard & Poor’s said in a statement today. The rating is the lowest investment-grade level.
“We expect the company to continue to post lower-than- anticipated credit measures because of continuing weak aluminum prices,” S&P said in the statement. “The company’s credit measures will remain weak at least through 2013, reflecting current weak prices, sluggish European demand, and slower-than- expected growth in China thus far this year.”
Moody’s Investors Service Inc. said in December it was putting Alcoa’s $8.6 billion of debt on review for downgrade.
Aluminum for delivery in three months on the London Metal Exchange has dropped 10 percent in the last 12 months as a global oversupply of the lightweight metal and slowing growth in China, the biggest consumer of the metal, weighs on prices.
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