S&P downgrades Kloeckner

Standard & Poor's said it lowered the long-term corporate credit rating on Kloeckner & Co. SE to B+ from BB-, along with the ratings on the debt instruments guaranteed by Kloeckner to B from B+.

The recovery rating on these instruments is unchanged at 5, reflecting 10% to 30% expected default recovery.

The outlook is stable.

The downgrades reflect the continued weak macroeconomic and steel-distribution industry environments in Europe, only partly mitigated by somewhat more supportive operating conditions for Kloeckner's U.S. operations, S&P said.

This led the agency to revise downward the previous forecast for Kloeckner's profits for 2013 to 2014, following a very weak 2012 and notwithstanding the positive effects anticipates from the ongoing restructuring program, S&P said.

Moreover, Kloeckner's weakened credit metrics fall short of the 15% to 20% commensurate with the previous BB- rating, the agency said.

Any improvement in the European operations remains highly uncertain, S&P added.

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