Moody’s cuts Aleris, notes

Moody's Investors Service said it downgraded Aleris International Inc.'s corporate family rating and probability of default rating to B2 and B2-PD from B1 and B1-PD, respectively.

The senior unsecured notes were downgraded to B3 from B2.

The outlook is stable.

Moody’s said the downgrade reflects Aleris' weak debt protection metrics and high leverage as evidenced by the EBIT/interest and debt/EBITDA ratios of around 0.5 times and 6.6 times, respectively, for the 12 months ended June 30, 2015 following pressure on performance in recent years from the aerospace inventory overhang, tightened scrap spreads and other challenges in the company's markets in Europe and North America as well as start-up costs associated with the new rolling mill in Zhenjiang, China.

While the downward trend in the company's performance appears to have bottomed, improvement in debt protection metrics and moderation in the leverage position is expected to occur only gradually through 2016 and into 2017, the agency said.

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