UPDATE 1-Fitch cuts Alcoa to "junk" status
(Adds company statement)
NEW YORK, April 11 (IFR) - Fitch Ratings cut aluminum maker Alcoa to "junk" status on Friday, citing expectations that the company's leverage will remain above that required for an investment-grade ranking.
The ratings agency cut the issuer to BB+ from BBB- with a stable outlook.
Fitch said the company's profitability has been hampered by global oversupply in aluminum.
"The downgrade reflects Fitch's view that financial leverage will remain above 2.5x on a total debt/EBITDA level and above 3.5x on an FFO adjusted level through 2014," Fitch said.
"Significant pension contributions will keep FFO adjusted leverage above 3.5 through 2015. The company has generated free cash flow after capital expenditures and dividends to shareholders since 2010 despite weak aluminum prices."
Alcoa is rated BBB- by S&P, the lowest investment-grade rating, and Ba1 by Moody's.
"Alcoa is aggressively transforming the company - building out our value-add businesses and improving our competitive position by lowering the cost base of our commodity business," Monica Orbe, director of corporate affairs at Alcoa said in an emailed statement after the downgrade.
"Our debt is at the lowest level it's been since 2007, and we have no significant maturities due before 2017. Our strong first quarter operating performance and positive long-term outlook are evidence that our strategy is working and that our future is bright." (Reporting by Natalie Harrison; Editing by Mariana Santibanez)