S&P cuts Kraton, rates notes B-

Standard & Poor's said it lowered its ratings on Kraton Polymers LLC because of continued weak profitability, which resulted from elevated raw material costs and forestalled Kraton's efforts to restore its financial profile.

S&P downgraded Kraton's corporate credit rating to B+ from BB-, senior secured bank loan to B+ from BB- and subordinated debt to B- from B.

S&P also assigned its B+ corporate credit rating to Polymer Holdings LLC, the parent of Kraton Polymers, and a B- rating to Polymer Holdings' proposed $90 million senior discount notes due 2014.

S&P said the downgrade reflects the deterioration in operating results due to the sharp increase in the cost of styrene and butadiene and the inability to pass on price increases in a timely manner.

The ratings incorporate Kraton Polymers' below-average business profile and its leadership position in the narrow SBC market, tempered by a difficult raw material and pricing environment and a very aggressive financial profile that is characterized by a high debt burden, according to S&P.

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