Moody's confirms Mittal Steel, lowers Arcelor Finance

Moody's Investors Service said it confirmed the Baa3 corporate family and senior unsecured issuer ratings of Mittal Steel Company NV and the Baa3 rating of its guaranteed floating-rate senior secured notes due 2010.

Moody's also confirmed the Ba1 ratings on the senior unsecured global notes issued by Mittal Steel USA, Inc., as well as the senior unsecured industrial revenue bonds and the senior unsecured pollution control bonds initially issued by Ispat Inland, Inc.

In addition, Moody's downgraded the long-term rating of Arcelor Finance and Usinor, now Arcelor France, to Baa3 from Baa2 and the short-term rating of Arcelor Finance to Prime-3 from Prime-2.

The outlook is stable for all ratings and is based on Moody's expectation that the combined cash flows of Mittal Steel and Arcelor will remain above the threshold metrics and that the combined management of the two groups will be able to integrate operations with a common strategic direction.

The Baa3 ratings are underpinned by the group's solid operational and cash flow profile, with financial metrics that Moody's expects to show a trend of de-leveraging following the transaction.

Both Arcelor and Mittal have demonstrated strong performance over recent years, primarily as a result of the buoyancy in steel prices but also thanks to cost improvements, efficiencies in operations and, in the case of Mittal, better access to lower-cost raw materials, the agency said.

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