S&P might lower ArcelorMittal

Standard & Poor's said it put the BB+ long-term corporate credit rating on ArcelorMittal and the BB+ issue rating on its senior unsecured debt on CreditWatch with negative implications.

The CreditWatch placement follows a combination of negative market developments over the last several months that constrain the profitability of ArcelorMittal and limit the substantial upside the agency had factored in for 2015:

• The rapid decline in iron ore prices, now factored into S&P’s ratings following the downward revision of its price assumptions for 2014-2016. Iron ore accounted for about 30% of the company's EBITDA in 2013;

• ArcelorMittal's results for the first half of 2014 are weaker than the agency had expected, in part due to the one-off items in the U.S. operations, such as the impacts of extreme weather and litigation payments;

• Economic recovery in Europe is losing momentum; and

• Waning conditions in the Brazilian steel industry, where production declined by 1% year-on-year in the first eight months of 2014.

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