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The Wait Is Over

01 February 2018 by lberuti

Since 2012, MTNA ( ArcelorMittal SA ), has repeatedly talked about its ambition to regain its lost investment grade status. Its battle is finally over. It has cut debt by more than half after it suspended dividends and embarked on an ambitious cost-cutting program. Today S&P upgraded the company from BB+ to BBB-, and said that “MTNA’s credit profile has been strengthening due to its prudent balance-sheet management and the supportive conditions across its key markets”. The major scare of late 2015, early 2016 is now a distant memory. After years of tough market conditions, the world’s biggest steel producer is enjoying a rare combination of good news. Demand is strong and production from China, which has long been the cause of too much supply, is slowing as plants are being shut to cut pollution. On Wednesday, when they released their highest earnings since 2011, MTNA also mentioned their plan to bring debt down to $6Bln from $10Bln at the end of 2017, and $22Bln back in 2012. It was music to investors’ ears who sent MTNA’s 5-year risk premium down to 101bps. That is the tightest it has traded since January 2008.