 "ArcelorMittal")
Moody's Investors Service on Friday said it has assigned Baa3 long-term issuer rating with stable outlook to global steel giant ArcelorMittal.
The upgrade reflects Moody's expectation that the company will maintain strong operating performance and will continue to reduce its leverage, it added.
"Moody's Investors Service (Moody's) has today assigned a Baa3 long-term issuer rating to ArcelorMittal, the world's largest steel producing company. The outlook on the rating is stable," the agency said in a statement.
Today's upgrade reflects the agency's expectation that ArcelorMittal will continue to reduce leverage on the back of improved earnings and operating cash flow, and that it will preserve its strengthened financial profile by prudently managing any future investments and M&A, said Gianmarco Migliavacca, Vice President Senior Credit Officer and the lead analyst for ArcelorMittal.
For 2018, the rating agency expects that ArcelorMittal's adjusted gross leverage will improve. Such improvement would be mainly driven by a 25 per cent year-on-year increase of its 2018 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to $10.7 billion from $8.6 billion in 2017.
The ratio of cash flows from operations (CFO) net of dividends to adjusted debt should exceed 25 per cent in 2018 versus 20 per cent in 2017 based on improved CFO and negligible dividends being paid, it said.
"The expectation of a stronger financial profile is underpinned by the assumption of operating conditions remaining supportive across all the main markets in which the company is established, with materially improved conditions in the US..., ongoing recovery in Brazilian steel spreads and stable spreads in Europe," Moody's said.
