S&P: Kloeckner outlook negative

Standard & Poor's said it revised the outlook on Kloeckner & Co. SE to negative from stable and affirmed the BB long-term corporate credit rating and the B+ rating on the senior unsecured debt issued by Kloeckner & Co. Financial Services SA and Kloeckner & Co. Finance International SA.

The recovery ratings on the €97.9 million 6% convertible bonds due 2014 issued by Kloeckner Financial Services and the €325 million 1½% senior unsecured convertible bonds due 2012 issued by Kloeckner Financial International are unchanged at 6.

"The outlook revision reflects our opinion that trading conditions in the steel sector will remain tough in the near term," S&P analyst Alex Herbert said in a statement.

Ratings reflect expectation of weak credit ratios in 2009 due to the steel market downturn, volatile funds from operations and working capital, and the competitive and fragmented nature of the metal-distribution industry, the agency noted.

These weaknesses are partially mitigated by Kloeckner's position as Europe's leading independent metal distributor and its ability to pass on steel price changes to customers, the agency said.

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