S&P cuts Asia Aluminum

Standard & Poor's said it lowered the long-term corporate credit rating on Asia Aluminum Holdings Ltd. to B from B+ and its $450 million senior unsecured notes due 2011 to B- from B+.

The outlook is negative.

"The lower rating on AAH reflects the weaker-than-expected improvement in the company's credit metrics over a prolonged period, due to the slower-than-expected completion of its flat-rolled products facility in Zhaoqing, Guangdong province," S&P analyst Bei Fu said in a statement.

"The lower issue rating reflects our expectation that AAH needs to incur more onshore Chinese bank facilities to fund the commissioning of its FRP facility within fiscal 2009, and that this will place bond holders in a more subordinated position than before," the analyst said.

The company's ratio of debt to EBTIDA is likely to remain above 7x, the agency said.

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