Moody's rates Guala floaters B1

Moody's Investors Service said it changed the outlook of Guala Closures SpA to negative from stable.

Concurrently, Moody's affirmed Guala's B1 corporate family rating and B1-PD probability of default rating, and B1 instrument rating on its €500 million backed senior secured notes due 2028.

Moody's also assigned a B1 instrument rating to the proposed €350 million backed senior secured floating-rate notes due 2029.

Proceeds from the new notes will be used to fund a distribution to Guala's shareholders, to pay for a 70% stake in the Chinese company Yibin Fengyi Packaging Co., Ltd. (Fengyi), for general corporate purposes (including further bolt-on acquisitions) and to pay fees and expenses associated with the transaction.

“Today's change in outlook to negative from stable reflects the significant deterioration in Guala's credit metrics pro-forma for the proposed transaction. The incremental debt will require sustained EBITDA growth in order to improve the company's credit metrics to appropriate levels for the B1 rating category which might be challenged in the context of weakening consumer sentiment and geopolitical risk,” said Donatella Maso, a Moody's vice president - senior credit officer and lead analyst for Guala, in a news release.

“After this transaction, Guala will be weakly positioned in its B1 rating with limited room for underperformance.”

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