S&P lowers Kraton

Standard & Poor's said it lowered its ratings on Kraton Polymers LLC, including the corporate credit and senior secured debt ratings to B from B+.

The outlook is negative.

The agency said that the downgrade follows weakened profitability primarily because of higher than expected raw material cost inflation that has resulted in the deterioration of key measures of credit quality.

While S&P said it expects management to raise prices in order to offset some of the raw material pressure, Kraton's cash flow generation is likely to remain weaker than initially expected during the next few quarters, limiting the company's ability to improve its highly leveraged financial profile back toward the level appropriate for the previous ratings.

The ratings on Kraton reflect its weak business risk profile derived from its narrow focus on the styrenic block copolymers market and a highly leveraged financial profile, S&P noted.

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