Moody's trims Outokumpu

Moody's Investors Service said it downgraded to B3 from B2 the corporate family rating and to B3-PD from B2-PD the probability of default rating of Outokumpu Oyj. Moody's also downgraded from B1 to B2 the instrument rating on the group's senior secured notes due June 2024. The outlook has been changed to negative from stable.

“The downgrade to B3 reflects Outokumpu's very high Moody's-adjusted financial leverage, which increased to 10.4x debt/EBITDA at year-end 2019 from 4.4x in 2018 following a sharp slump in earnings against a marked slowdown in demand and strongly negative price effects last year,” said Moody’s in a press release.

Moody's forecasts conditions to worsen this year amidst the coronavirus pandemic curbing demand and disrupting production and supply chains globally, the agency said.

“Moody's, therefore, foresees a significant drop in Outokumpu's stainless steel deliveries over the next few quarters, pressuring earnings and free cash flow generation, which will likely turn negative this year in Moody's view,” the agency said.

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