STEEL firm Corus last night shrugged off a damaging blow to its attempts to haul itself out of a £1.4bn debt mire.

The Anglo-Dutch producer was hit by news its credit score was to be downgraded by ratings agency Moody's.

Corus was notched back four points on Moody's rankings, from BA2 to B3, meaning it will have to pay out higher interest payments on its debt.

The move leaves Corus feeling increasingly like it is swimming against a strong tide in its efforts to stem financial losses.

William Baker Baker, director at Wise Speke stock- brokers, believes the downgrading was on the cards but suggested it might bring other factors to a head.

Corus has, as yet, held off announcing cutbacks designed to redress its loss making. Mr Baker Baker said: "Moody's decision was fairly inevitable and will probably be more unhelpful than anything else. It may precipitate a decision (on cutbacks) sooner rather than later.

"They could possibly have carried on for a while before this decision if the banks had retained their support. The fact Moody's has now downgraded them will mean the banks are not as supportive."

In a statement, Moody's said the move reflected continued operating losses, further restructuring needs at Corus' UK assets and the cancellation of the intended sale of its aluminium businesses.

Moody's also highlighted the potential hurdles Corus faces in renewing a £1.4bn loan and the risk that a more aggressive debt restructuring would be necessary if the steel group is unable to obtain support from its bankers to implement its turnaround programme.

Corus has axed 10,000 jobs in the past few years since forming from the merger of British Steel with Dutch firm Hoogovens in 1999. Last month it announced the departure of chief executive Tony Pedder after annual losses reached £458m.

Proceeds from a planned sale of Corus's aluminium businesses were supposed to finance recovery measures proposed for the UK steel operation.

However, failure to complete the deal when it was blocked by the group's Dutch supervisory board earlier this year meant Corus had to look afresh for financing from equity and debt providers.

Further job cuts and plant closures are feared as the company seeks to stem financial losses. It has major plants at Teesside, Port Talbot and Scunthorpe.

A spokesman for Corus said: ''It is just Moody's reflecting what has happened with our aluminium business. What Moody's has said would lead to a positive rating is exactly what we are doing.''