Moody’s drops Cliffs Natural, notes

Moody's Investors Service said it downgraded Cliffs Natural Resources Inc.’s corporate family rating to Ca from Caa1 and probability of default rating to Ca-PD from Caa1-PD.

At the same time, the agency downgraded the senior secured first-lien notes to Caa1 from B1, the senior secured second-lien notes to Caa3 from B3 and the senior unsecured notes to C from Caa2.

The speculative grade liquidity rating was affirmed at SGL-3.

The outlook is negative.

Moody’s said the downgrade incorporates expectations for continued weakening in debt protection metrics and high leverage. The agency estimates leverage, as measured by the debt/EBITDA ratio of about 12 times at year-end 2015.

The downgrade also acknowledges the company's announcement of an offer to exchange up to $710 million of new 1˝-lien senior secured notes due 2020 for existing senior and second-lien notes at a significant discount to par.

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