Moody's introduces new ratings

Moody's Investors Service has introduced two new ratings: probability-of-default ratings and loss-given-default ratings.

The agency's current long-term credit ratings are opinions about expected credit loss that incorporate both the likelihood of default and the expected loss in the event of default. The loss-given-default rating methodology will disaggregate these two key assessments in long-term ratings. The agency said the methodology will also enhance the consistency in its notching practices across industries and will improve the transparency and accuracy of its ratings, as Moody's research shows that credit losses on bank loans have tended to be lower than those for similarly rated bonds.

Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations.

Loss-given-default assessments (or LGDs) are assigned to individual rated debt issues - loans, bonds and preferred stock - and express Moody's opinion of expected loss as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0%-9%) to LGD6 (loss anticipated to be 90%-100%).

Below is a list of the rating actions for Moody's rated companies, sorted by industry. The rating immediately after the company name denotes the corporate family rating and the percentages next to the LGDs represent the expected loss-given-default rates.

North American metals and mining sector

Aleris International, Inc., B1; probability-of-default rating: B1; term loan, Ba3, LGD3, 32%. Aleris Deutschland Holding GMBH, term loan, Ba3, LGD3, 34%.

Alpha Natural Resources LLC, B1; probability-of-default rating: B1; revolver and term loan, B1, LGD3, 42%; notes, downgraded to B3 from B2, LGD5, 89%.

Chaparral Steel Co., B1; probability-of-default rating: B1; revolver, upgraded to Ba1 from Ba2, LGD2, 16%; notes, downgraded to B2 from B1, LGD4, 68%.

CST Industries, Inc., B2; probability-of-default rating: B2; bank facilities, upgraded to B1 from B2, LGD3, 34%.

Drummond Co., Inc., Ba3; probability-of-default rating: Ba3; revolver, term loan facility and notes, Ba3, LGD4, 54%.

Euramax International, Inc., B2; probability-of-default rating: B2; first-lien bank facilities, upgraded to B1 from B2, LGD3, 34%; second-lien bank facility, Caa1, LGD5, 81%. Euramax Holdings Ltd., bank facilities, upgraded to B1 from B2, LGD3, 34%.

Gibraltar Industries, Inc., Ba2; probability-of-default rating: Ba2; revolver and term loan, Ba1, LGD3, 31%; notes, Ba3, LGD5, 83%.

International Coal Group, Inc., B2; probability-of-default rating: B2; notes, downgraded to Caa1 from B3, LGD5, 79%. ICG, LLC, credit facility, upgraded to Ba3 from B1, LGD2, 25%.

James River Coal Co., Caa1; probability-of-default rating: Caa1; credit facility, upgraded to B1 from B3, LGD2, 17%; notes, Caa2, LGD5, 71%.

John Maneely Co., B1; probability-of-default rating: B2; revolver, upgraded to Ba1 from Ba3, LGD2, 13%; term loan, B2, LGD4, 51%.

Novelis Inc., B1; probability-of-default rating: B1; revolver and term loan, upgraded to Ba2 from Ba3, LGD2, 24%; notes, downgraded to B3 from B2, LGD5, 76%. Novelis Corp., notes, upgraded to Ba2 from Ba3, LGD2, 24%.

Peabody Energy Corp., Ba1; probability-of-default rating: Ba1; revolver, term loan and notes, Ba1, LGD4, 52%.

Pinnoak Resources, LLC, B3; probability-of-default rating: Caa1; revolver and term loan, B3, LGD3, 32%.

Stillwater Mining Co., B1; probability-of-default rating: B1; revolver and term loan facility, B1, LGD3, 43%; revenue bonds, downgraded to B3 from B2, LGD6, 93%.

Tube City IMS Corp., B1; probability-of-default rating: B1; first-lien term loan, B1, LGD3, 43%; second-lien term loan, B3, LGD5, 86%.

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