Moody's ups Constar note to Caa2

Moody's Investors Service said it changed Constar International Inc.'s outlook to stable from negative, upgraded the company's $175 million 11% senior subordinated notes due 2012 to Caa2 from Caa3 and affirmed the B3 corporate family rating and B3 $220 million floating-rate first mortgage notes due 2012.

The agency said the change of outlook acknowledges Constar's improved consolidated performance due to strong product mix performance and working capital improvements as average receivables days outstanding and average inventory days have been reduced. While acknowledging the likely continuation of some variances in monthly volume and profitability on the conventional business, the stable outlook recognizes the company's strong U.S. performance, disappointing but stable European performance an improved raw material market, Constar's established customer base and sizable contracted revenue.

Constar's ratings reflect the company's weak, albeit improving, credit statistics as evidenced by the expectation of positive free cash flow throughout the intermediate term and some reduction of its 6.7x debt to last-12-month EBITDA ratio, Moody's said. Continued margin pressure given the substantial portion of commoditized products in Constar's revenue mix, price discounting, price pressure as a result of customer consolidation and high raw material and energy costs are also reflected in the ratings.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.