Moody's on Tuesday downgraded the credit rating of world's largest steel maker
ArcelorMittal to junk status, citing the deteriorating global market scenario, and retained negative outlook on the entity.
The global rating agency said that ArcelorMittal's
operating environment is likely to get more worse before getting better.
Moody's Investors Service has cut the rating to 'Ba1' - a speculative investment grade - from 'Baa3'.
"The downgrade reflects the deterioration in global steel markets over the last six months, as evidenced by ArcelorMittal's third quarter 2012 performance, its worst quarter since 2Q09," Moody's said in a statement.
In the 2012 third quarter, steel shipments were down 8.3 per cent compared to the previous three months.
The steel behemoth had an operating loss and free cash flow was negative $1.9 billion, causing an increase in the company's gross debt.
According to the agency, the rating action would affect about $24 billion of debt.
"We see challenging conditions continuing for ArcelorMittal over several quarters with its operating environment more likely to get worse before it gets better," Steve Oman, who is senior vice president and lead analyst for the EMEA steel industry at Moody's, said.
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