UPDATE: Bank of America Downgrades ArcelorMittal to Neutral on Rights Issue Risks

Bank of America reduced its rating on ArcelorMittal MT from Buy to Neutral on the potential of a downgrade to sub-IG on shares. Bank of America noted, "We downgrade ArcelorMittal stock to Neutral from Buy on the increasing risk of a rights issue towards year end. We estimate that a downgrade to sub-IG would be -3% dilutive for equity shareholders due to the incremental interest costs associated with step-up clauses on debt. If MT were to maintain its IG rating by doing a rights issue for c$5bn, it would be -11% dilutive to EPS in 2013." ArcelorMittal closed at $15.95 on Wednesday.