Two debt ratings agencies on Friday downgraded the senior unsecured bonds of Alcoa Inc., the top U.S. aluminum producer, on concerns about negative free cash flow and higher-than-expected debt.

Both Fitch Ratings and Moody's Investors Service cut Alcoa's ratings to their lowest investment-grade ratings. Fitch's outlook is "Negative;" Moody's outlook is "Stable."

Alcoa's cash balances, while large relative to historic levels, have declined to $762 million at Dec. 31, 2008, from $831 million at Sept. 30, 2008, while debt was up to $449 million in the quarter from $10.6 billion, Fitch said.

The two agencies' actions come three days after Standard & Poor's Ratings Services downgraded Alcoa's debt, with a "Negative" outlook, to one-notch above junk - and the same day that Aleris International Inc., another aluminum producer, filed for bankruptcy.

"The downgrade considers the relatively weak debt protection measures, increased debt levels and leverage ratios, and negative free cash flow position of Alcoa going into a major economic downturn," Moody's said in a news release.

"Moody's expects Alcoa's debt protection ratios to further deteriorate and funding requirements to increase."

Fitch said it expects "weak trading conditions to persist over the next 12-18 months."

Alcoa shares were down 15 cents to $7.36 in midday trading.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed