ArcelorMittal's bonds plunged and its shares fell the most since September 2011 after the company had its debt rating cut to junk by Standard & Poor's, a week after saying an investment grade was a strategic priority.

The world's biggest steelmaker's long and short term ratings were cut to BB+/B from BBB-/A-3 by S&P, which cited uncertainty about its debt reduction plan and a weakening steel industry. ArcelorMittal said the downgrade was driven by a change in S&P’s view of the macro economic environment.

ArcelorMittal is seeking to cut its debt even as the steel industry is roiled by deteriorating global growth that is eroding demand. Steelmakers are reporting lower earnings as the European crisis deepens and commodity prices weaken amid slowing Chinese economic growth. The company's net debt was USD 22 billion at the end of the second quarter.

Ms Nicola Davidson spokeswoman of ArcelorMittal said that "We have various measures in place and a clear road-map to reduce debt. Investment grade rating is important to us and we will continue to follow a financial strategy based around achieving investment grade status."

Ms Davidson said that while the company has no immediate plans to alter its debt reduction strategy, ArcelorMittal will not rule anything out.

Source - Bloomberg

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