Moody's upgrades Kloeckner

Moody's Investors Service said it upgraded Kloeckner & Co. AG's corporate family rating to Ba2 from Ba3 and Kloeckner Investment SCA's senior subordinated bonds to B1 (LGD6, 95%) from B2 (LGD6, 92%).

The outlook was changed to stable from positive.

The agency said the upgrade reflects the significant reduction in debt since the company's initial public offering in mid 2006 and Kloeckner's positive performance.

The upgrade further reflects Moody's expectations that performance will remain positive and that the improvement in the company's capital structure will be sustainable, even including increased debt following the acquisition Primary Steel, and, together with good prospects for the current year, will lead to a sustainable debt-to-EBITDA ratio of below 3x and stable or further improving margins.

The change in the bonds' loss-given-default rate to 95% reflects the intended implementation of a syndicated loan that will be used to refinance some of the company's bilateral loans, Moody's said.

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