The new rating, claims Aaron Levitt on the website, 'firmly puts the company's bonds squarely in the high-yield or 'junk' category, meaning that the American aluminium giant has the same credit score bracket as Royal Bank of Scotland.

Needless to say, Alcoa ain't too pleased. The company has issued a statement claiming that while it is disappointed by Moody's decision, it remain committed to maintaining its investment grade rating 'and will continue to execute on our strategy and our 2013 goal of generating positive free cash flow'.

"We believe Moody’s decision is a greater reflection of macroeconomic conditions and the volatility of metal prices than a true statement of the financial and operating strength of Alcoa," the company said, adding that it has a strong balance sheet and liquidity position with limited near-term bond maturities.

Moody's claims that the Alcoa downgrade 'reflects our expectations that, despite Alcoa's success in reducing costs and improving productivity, continued headwinds pressuring fundamentals in the aluminum industry and aluminum prices, and most specifically the level of performance improvement that can be achieved in the primary segment, will continue to push out the time frame in which debt protection metrics appropriate for an investment grade rating can be achieved. We believe this is likely to continue through 2013 and 2014.'

Alcoa currently holds debts of US$8.83 billion, down from US$10.6 billion in 2008. The company is cutting costs – recently announcing the shutdown of two production lines at its Baie-Comeau smelter in Quebec, Canada, and is considering curtailing 460kt of capacity by the end of 2014.

Alcoa's engineered products, claims Levitt, has been more profitable than its upstream operations.