Rating agency Fitch has downgraded the Long-Term Issuer Default Rating (IDR) and senior unsecured ratings of ArcelorMittal SA to BB+ from the earlier BBB- rating. Fitch’s outlook for the long-term IDR remains negative, while the short-term IDR was downgraded to B from F3.
The rating rationale stated that the economic fallout of the COVID-19 pandemic will impact steel consumption well into 2021 as demand from automobile and construction sectors will remain low. ArcelorMittal’s 2019 rating sensitivity was also negative.
Fitch reaffirmed the company’s ability to respond to the situation. ArcelorMittal has a strong liquidity position with $10.4bn in cash and adequate credit lines for the short-term debt of $2.6bn and is ‘well-placed to cope’ the challenging quarters of 2020, said the Fitch report.
ArcelorMittal is globally the second-largest steel producer in terms of actual output. ArcelorMittal SA invoked force majeure on Apr 3 as the company struggled to dispatch shipments to supplier and customers amid a three-week COVID-19 lockdown imposed by the government of South Africa. The company had scaled down its operations given the challenges faced by the country’s economy, as reported by Davis Index.