S&P downgrades Aleris

S&P said it lowered its corporate credit rating on Aleris International Inc. to B- from B. The outlook is stable.

At the same time, S&P said it lowered its issue-level ratings on the company’s $800 million 9˝% senior secured notes due 2021 to B- from B. The recovery rating is 3, indicating an expectation for meaningful (50%-70%; rounded estimate: 55%) recovery prospects in the event of a payment default.

S&P also lowered its issue-level rating on its $500 million (approximately $436 million outstanding) 7 7/8% senior unsecured notes due 2020 to CCC+ from B-. The recovery rating is 5, indicating an expectation for modest (10%-30%; rounded estimate: 10%) recovery prospects in the event of a payment default.

“The downgrade reflects our view that Aleris will generate weak credit metrics over the next 12 months, potentially improving as EBITDA ramps up to support debt-financed fixed asset and working capital investments,” S&P said in a news release.

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