S&P ups Alcoa Aluminio

Standard & Poor's said it raised its foreign-currency corporate credit rating on Alcoa Aluminio SA to BBB- from BB+ and removed the ratings from CreditWatch, where it was placed with positive implications on Nov. 3.

At the same time, the BBB- local-currency corporate credit rating on Aluminio was affirmed, S&P said. The outlook is stable.

S&P noted the ratings on Aluminio reflect the company's strong cash generation vis-ŕ-vis debt obligations and a favorable business profile, supported by a competitive cost position, moderate financial policies and the implicit financial support from its sole shareholder, Alcoa Inc. (A-/negative/A-2).

These positives are somewhat offset by Aluminio's exposure to the cyclical and capital intensive aluminum industry, some leverage deriving from financial guarantees extended to energy projects and some degree of exposure to Brazil's more volatile economic and operating environment, S&P added.

The agency noted the ratings on Aluminio are significantly higher than the sovereign ratings of the Federative Republic of Brazil (foreign currency BB-/positive/B, local currency BB/positive/B), where the company's assets are located.

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