LONDON, Jan 24 (Reuters) - Credit rating agency Moody’s has cut German steelmaker ThyssenKrupp’s debt to “junk” status, a move it said reflected challenging market conditions and ongoing cash losses in the group’s Americas business.
Moody’s downgraded Germany’s largest steelmaker to “Ba1” with a negative outlook, from “Baa3”, citing the fact the group’s planned sale of its Steel Americas arm may be below a book value of 3.9 billion euros ($5.2 billion) - already written down last year - and not happen until the company’s fourth quarter, which ends in September. That would force the group to absorb ongoing losses for the full year.
ThyssenKrupp said earlier this month that it hoped to wrap up the sale of the mills in Brazil and the United States this year, ending a costly foray for the group.
“The negative rating outlook indicates the challenges posed over the next 12 months by the soft European economy and, in particular, lacklustre steel and automotive markets,” Moody’s said. “The outlook also reflects uncertainty surrounding the sale of Steel Americas, further asset impairments and possible shareholder and rail price-fixing lawsuits.”
Moody‘s, however, said it had taken into account ThyssenKrupp’s efforts to prune its sprawling portfolio and to push through cost cuts as it seeks to end a period of losses.
Moody’s cut the rating of steelmaking giant ArcelorMittal, the world’s largest, to “junk” in November.