NEW YORK (AP) — Fitch Ratings Service downgraded Alcoa's credit rating to "junk" status on Friday, saying it thinks the company's leverage will stay high and aluminum prices and profitability will remain low.
High levels of aluminum supplies have hurt Alcoa's prices, and the company has repeatedly cut its smelting capacity in response. Fitch said it believes prices will slowly improve, but the firm expects Alcoa to remain heavily leveraged through 2015. The company said it had about $7.7 billion in debt during the first quarter.
Fitch lowered its rating on Alcoa's credit to "BB+" from "BBB-". That took the rating from investment-grade to non-investment grade.
Alcoa said in a statement that it is reducing costs in its commodity business and company debt is at its lowest level since 2007. It added that it doesn't have any significant debts maturing until 2017.
The company reported its first-quarter results on Tuesday. Alcoa said the price it was paid for aluminum decreased 8 percent from a year ago, and revenue also fell because of lower prices. Alcoa took a loss of $178 million because of charges related to idling capacity at aluminum smelters and mills.
Shares of Alcoa lost 16 cents to $12.54 on Friday and declined 4 cents to $12.50 in aftermarket trading.