S&P rates Clariant revolver BBB-, view stable

S&P said it revised its outlook on Clariant AG to stable from negative and affirmed its BBB- long-term and A-3 short-term corporate credit ratings.

The agency also affirmed the BBB- ratings on all of Clariant's senior unsecured bonds and assigned a BBB- rating to the company's new CHF 500 million revolving credit facility due 2021 (with two one-year extension options).

S&P withdrew the BBB- rating on the €500 million 5.625% bond that the company repaid with cash in January.

S&P said the outlook revision and affirmation reflect its view of a continued improvement in the company's unadjusted EBITDA (after exceptional items but including equity income from joint ventures) to CHF 785 million in 2016 on a margin of 13.4%.

“During 2016, Clariant's margins continued to benefit from lower raw material costs, improvements to its product mix, and cost efficiencies,” the agency said in a news release.

“A focus on cash flow generation and working capital management (particularly in the mature Plastics & Coatings division) resulted in the company generating meaningful free operating cash flow (FOCF) of CHF 225 million in 2016, up from CHF 25 million in 2015 and largely negative in 2011-2014.”

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