S&P Lifts Outlook on U.S. Steel (X) to Stable; Ratings Affirmed
- AT&T (T) Agrees to Acquire Time Warner (TWX) for More than $80 Billion - WSJ
- Top 10 News for 10/17 - 10/21: Merger Rumors Abound; CEOs Depart; Tesla Kicks Autopilot Up A Notch
- Wall Street ends little changed; Microsoft hits record
- AT&T (T) in Advanced Talks to Acquire Time Warner (TWX) - DJ
- Rockwell Automation (ROK) Said to Attract Takeover Interest from Schneider Electric - Source
Get instant alerts when news breaks on your stocks. Claim your 2-week free trial to StreetInsider Premium here.
S&P Global Ratings said it revised its rating outlook on U.S. Steel Corp. (NYSE: X) to stable from negative and affirmed its 'B' corporate credit rating on the company.
At the same time, we affirmed our 'BB-' issue-level rating on the company's senior secured notes and 'B' issue-level rating on its senior unsecured notes. The '1' recovery rating on the senior secured notes indicates our expectation of very high (90%-100%) recovery in the event of a default. The '4' recovery rating on the senior unsecured notes indicates our expectation of average (30%-50%; lower half of range) recovery in the event of a default.
"The stable outlook reflects our view that the stronger steel price environment will offset weakness from lower volumes and persistently weak energy markets over the next 24 months," S&P Global Ratings credit analyst William Ferara. "We expect credit measures to improve, yet remain somewhat volatile for the rating, with adjusted debt to EBITDA of about 3x to 4x and slightly positive free operating cash flow in 2016 and 2017. We expect the company's liquidity position to remain exceptional; however, we recognize that its cash balance is susceptible to cash uses during weaker steel price conditions."
We could lower the rating if steel prices came under severe pressure or the company's competitive position weakened relative to other steel producers. We could also lower the rating if the company's liquidity position were characterized as adequate or less, which could occur if the ratio of the company's liquidity sources to uses is less than 1.2x over the next 24 months or its qualitative liquidity factors hamper its quantitative liquidity considerations. Weaker credit metrics could also prompt a lower rating over the next 12 months if EBITDA interest coverage is roughly 1.25x to 1.5x or adjusted debt leverage materially exceeds 10x.
We could raise the rating if there is an improvement in the long-term expectations for the steel sector or a reduction in its price volatility. We would expect stronger credit metrics to be sustained for the next several quarters, and to remain at those levels, with debt to EBITDA below 3x and EBITDA interest coverage of above 3x. We would also need to view the company as comparable to similarly rated peers, with an improved competitive position.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- France outlook raised to Stable from Negative at S&P
- Accuride (ACW) Ratings Placed on Watch for Upgrade by S&P
- S&P Upgrades Cloud Peak Energy (CLD) to 'B-'; Outlook is Negative
Create E-mail Alert Related CategoriesCredit Ratings
Related EntitiesStandard & Poor's
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!