Moody's: Kloeckner outlook negative

Moody's Investors Service said it changed the outlook for Kloeckner & Co. SE's Ba2 corporate family rating to negative from stable.

The action was prompted by collapsing demand for steel and steel prices, which is expected to have negative effects on Kloeckner's leverage metrics going forward and could materially reduce headroom under financial covenants in 2009 under some negative economic scenarios, according to the agency.

The Ba2 rating takes into account the expectation that, after a severe deterioration in 2009, due to a substantial reduction in net debt, the company's leverage will improve over time again to an adjusted debt-to-EBITDA ratio below 3.5x, Moody's said.

The company's short-term liquidity position will be strong for the next 12 months with very limited debt maturities, low ongoing capital expenditure requirements and a high level of available revolving credit facilities, the agency said.

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