S&P revises SI group view to positive

S&P said it revised the outlook for SK Mohawk Holdings Sarl (SI Group) to positive from negative and affirmed the B- issuer credit rating and issue-level ratings.

“Despite a challenging operating environment, SI Group began to see a rebound in the second half of 2020 in some key end markets, which we expect to continue in 2021 as the global economy recovers from the Covid-19 pandemic. The company experienced a sharp decline in demand in the second quarter of 2020, including rubber and adhesives, oilfield solutions, industrial resins, and fuel and lubricants. Through the second half of 2020, the company has seen some of these end markets recover as the economy began to reopen,” S&P said in a press release.

The outlook reflects expectations for earnings improvement from 2020 levels and stable to strengthening credit metrics over the next year. The agency said it projects SI Group's S&P Global Ratings'-adjusted weighted average debt to EBITDA will be between 6x and 7x over the next two years.

SI Group also seeks to amend its loan pact to let it sell up to $300 million in unsecured debt, which it would use to redeem its preferred equity. “The issuance would not have any impact on the company's issuer credit rating or existing B- secured issue-level rating. The unsecured issuance will not have a material impact on the secured debt holders' recovery prospects. As a result, the 3 (rounded estimate: 55%) recovery rating on the company's existing secured debt remains unchanged,” S&P said.

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