Moody’s cuts Cleveland-Cliffs

Moody’s Investors Service said it downgraded Cleveland-Cliffs Inc.’s corporate family rating and probability of default rating to B2 from B1 and B2-PD from B1-PD, respectively.

The agency lowered the guaranteed senior secured note ratings to B2 from Ba3, the guaranteed senior unsecured notes to B3 from B2 and the senior unsecured notes to Caa1 from B3. The speculative grade liquidity rating is unchanged at SGL-2. Moody’s revised the outlook to stable from under review.

This concludes the review for downgrade started on Sept. 28, the agency said.

“The downgrade of the CFR to B2 incorporates the weaker than expected debt protection metrics in 2021 and only slow improvement in 2022 as a result not only of increased debt levels from the acquisition of AK Steel but also the pending acquisition of ArcelorMittal USA LLC (ArcelorMittal US), the continued uncertainty of sustainability of improving conditions in the U.S. steel industry and the fragile nature of the economic recovery conditions,” said Carol Cowan, a Moody’s senior vice president and lead analyst for Cliffs, in a press release.

“Additionally, the downgrade considers the execution risk associated with two major business transforming acquisitions within a short time period amidst difficult industry and economic conditions,” Cowan added.

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