On Friday, Moody's Investors Service placed its ratings on AK Steel Holding Corp. on review for a possible downgrade, pointing to the steelmaker's weak operating performance and ongoing losses incurred. AK Steel currently rates at B1, four levels into junk territory.
The ratings company's review for a possible downgrade reflects the deterioration in AK Steel's debt-protection metrics. Moody's said it expects AK Steel's weak results to continue, noting headwinds facing the steel industry, pressure on steel prices and slowing economic factors.
Disclosure of the review came a week after AK Steel warned that its third-quarter loss will be wider than consensus estimates, due partly to lower prices for carbon steel products and reduced raw-material surcharges. The company attributed the lower selling prices to lower spot-market prices for carbon-steel products amid an unstable global economy and reduced raw-material surcharges to lower raw-material costs.