Moody's downgrades Kemet

Moody's Investors Service said it downgraded Kemet Corp.'s corporate family rating to Caa1 from B2 and the probability of default rating to Caa1-PD from B2-PD.

The downgrades are based on an expectation that Kemet's liquidity will be pressured by maturing liabilities and negative free cash flow due to the interest burden and continued operating losses at the film and electrolytic segment, Moody's said.

The agency also said it downgraded Kemet's senior notes to Caa1 from B2 and liquidity rating to SGL-4 from SGL-2.

The outlook is stable.

The ratings reflect the company's weak liquidity and additional liquidity pressure that could emerge over the next year, Moody's said.

The ratings also consider the highly cyclical nature of the capacitors industry as a whole and Kemet's limited share in both the ceramic and film and electrolytic market niches, which limits pricing power, the agency said.

Supporting the rating is the company's strong market position in the tantalum capacitors niche, the agency said.

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