Moody’s upgraded ArcelorMittal to Baa3 citing significantly strengthened operating performance and recovery in credit metrics over the recent quarters and expectations of further strong improvements through the remainder of the year. ArcelorMittal saw EBITDA surging to $5bn from $3.2bn in 1Q2021 and $700mn in 2Q2020, supported by a strong rebound in demand and rising steel prices across all regions. Also, strong free cash flow generation has seen the group’s net debt decrease to $5bn as of end-June from $6.4bn at end-2020. Adjusted leverage declined “significantly to around 1.8x net debt/EBITDA for the 12 months through June 2021 from 6.4x at the end of 2020” and Moody’s expects this to further reduce in H2 this year. They also acknowledge the strong de-leveraging by the company supported by ~$3.5bn in debt repayments in H1 this year including the repurchase of around $1.5bn equivalent of bonds following a cash tender offer and around €600mn of Schuldschein prepayments. ArcelorMittal has $4.2bn in cash and cash equivalents with a strong liquidity profile. Moody’s expects the company to maintain financial metrics in-line with the Baa3 ratings.

ArcelorMittal’s dollar bonds were flat with its 4.25% 2029s at 113, yielding 2.44%

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