Moody's introduces new ratings

Moody's Investors Service has introduced two new ratings: probability-of-default ratings and loss-given-default ratings.

The agency's current long-term credit ratings are opinions about expected credit loss that incorporate both the likelihood of default and the expected loss in the event of default. The loss-given-default rating methodology will disaggregate these two key assessments in long-term ratings. The agency said the methodology will also enhance the consistency in its notching practices across industries and will improve the transparency and accuracy of its ratings, as Moody's research shows that credit losses on bank loans have tended to be lower than those for similarly rated bonds.

Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations.

Loss-given-default assessments (or LGDs) are assigned to individual rated debt issues - loans, bonds and preferred stock - and express Moody's opinion of expected loss as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0%-9%) to LGD6 (loss anticipated to be 90%-100%).

Below is a list of the rating actions for Moody's rated companies, sorted by industry. The rating immediately after the company name denotes the corporate family rating and the percentages next to the LGDs represent the expected loss-given-default rates.

AK Steel Corp., B1; possibility-of-default rating: B1; notes, downgraded to B2 from B1, LGD4, 59%.

Arch Coal, Inc., Ba3; possibility-of-default rating: Ba3. Arch Western LLC, notes, downgraded to B1 from Ba3, LGD4, 67%.

California Steel Industries, Inc., Ba2; possibility-of-default rating: Ba2; notes, downgraded to Ba3 from Ba2, LGD5, 71%.

Century Aluminum Co., Ba3; possibility-of-default rating: Ba3; notes, downgraded to B1 from Ba3, LGD5, 77%.

Consol Energy Inc., Ba2; possibility-of-default rating: Ba2; notes, upgraded to Ba1 from Ba2, LGD2, 28%.

Claymont Steel, Inc., Caa1; possibility-of-default rating: B3; notes, Caa1, LGD4, 64%.

Earle M. Jorgensen Co., Ba3; possibility-of-default rating: Ba3; notes, Ba3, LGD4, 59%.

Foundation PA Coal Co., Ba2; possibility-of-default rating: Ba2; notes, Ba3, LGD5, 83%.

Freeport-McMoran Copper & Gold Inc., Ba3; possibility-of-default rating: Ba3; notes, B1, LGD5, 80%.

Gerdau Ameristeel Corp., Ba2; possibility-of-default rating: Ba2; notes, downgraded to Ba3 from Ba2, LGD4, 61%.

LGD3, 31%; notes, Ba3, LGD5, 83%.

HudBay Minerals, Inc., B1; possibility-of-default rating: B1. Hudson Bay Mining & Smelting Co., Ltd., notes, upgraded to Ba3 from B1, LGD3, 40%.

Indalex Holding Corp., B3; possibility-of-default rating: B3; notes, downgraded to Caa1 from B3, LGD4, 68%.

Massey Energy Co., B1; possibility-of-default rating: B1; senior unsecured notes and 2.25% convertible senior unsecured notes, downgraded to B2 from B1, LGD4, 58%; 4.75% convertible senior unsecured notes, downgraded to B3 from B2, LGD6, 97%.

Metals USA, Inc., B1; possibility-of-default rating: B1; notes, B3, LGD5, 83%.

National Coal Corp., Caa2; possibility-of-default rating: Caa2; notes, Caa2, LGD4, 56%.

PNA Group, Inc., B1; possibility-of-default rating: B1; notes, B3, LGD5, 79%.

RathGibson, Inc., B2; possibility-of-default rating: B2; notes, downgraded to B3 from B2, LGD4, 63%.

Russel Metals, Inc., Ba1; possibility-of-default rating: Ba1; notes, Ba2, LGD4, 68%.

Ryerson, Inc., B1; possibility-of-default rating: B1; notes, downgraded to B3 from B2, LGD6, 91%.

Steel Dynamics, Inc., Ba1; possibility-of-default rating: Ba1; notes, downgraded to Ba2 from Ba1, LGD4, 65%; convertible notes, Ba2, LGD6, 94%.

United States Steel Corp., Ba1; possibility-of-default rating: Ba1; notes and quarterly income debt securities, Ba1, LGD4, 64%. Allegheny Country Industrial Development Authority, PA, pollution-control revenue bonds, Ba1, LGD4, 64%.

USEC Inc., B1; possibility-of-default rating: B1; notes, downgraded to B3 from B2, LGD5, 75%.

Wise Metals Group LLC, Caa3; possibility-of-default rating: Caa3; notes, Ca, LGD5, 82%.

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