Moody's downgrades GrafTech, rates loan Ba2

Moody's Investors Service said it assigned a Ba2 (LGD2) rating to GrafTech International Ltd.’s new $40 million delayed-draw senior secured term loan A, downgraded its corporate family rating to Ba3 from Ba2, probability of default rating to Ba3-PD from Ba2-PD, senior secured revolving credit facility to Ba2 (LGD2) from Ba1 and senior notes to B1 (LGD5) from Ba3 and affirmed the speculative grade liquidity rating at SGL-3. The outlook is negative. This concludes the review for downgrade that began in September.

"The recent credit agreement amendment and new term loan improve GrafTech's liquidity and ability to manage the upcoming maturity of the subordinated notes, but credit metrics are expected to remain weak for a prolonged period, and a coming proxy contest creates new uncertainty at this critical juncture for the company,” Ben Nelson, a Moody's assistant vice president, said in an agency news release. "Factors outside the company's control, particularly the weak outlook for the steel industry and the proxy contest risks, continue to weigh on GrafTech's credit profile despite solid execution on cost reduction initiatives."

Moody's does not expect GrafTech to restore credit metrics to levels appropriate for the Ba2 corporate family rating, including adjusted financial leverage below 4 times (debt/EBITDA), by the end of 2015.

© 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.