S&P assigns B to Kraton notes

S&P said it assigned its B issue-level and 5 recovery rating to Kraton Corp.'s proposed €290 million senior unsecured notes due 2026 issued by Kraton Polymers LLC. The 5 recovery rating reflects an expectation of modest (10%-30%; rounded estimate: 25%) recovery prospects in the event of a payment default.

S&P said it expects the company will use these proceeds and the $90 million tack on to the existing U.S. dollar-denominated term loan due 2025 to refinance its existing $440 million senior unsecured notes due 2023.

At the same time, S&P said it lowered its issue-level ratings to B from B+ and revised the recovery rating to 5 from 4 on the existing $440 million and $400 million senior unsecured notes issued by Kraton Polymers LLC.

The lower recovery rating is the result of the $90 million increase of senior secured debt in the proposed refinancing that reduces collateral available to unsecured debt. The 5 recovery rating reflects S&P’s expectation of modest (10%-30%; rounded estimate: 25%) recovery prospects in the event of a payment default, the agency said in a news release.

S&P said it also affirmed its issue-level rating of BB on the company's existing $390 million (includes the $90 million proposed tack on) first-lien term loan issued by Kraton Polymers LLC and €315 million first-lien term loan issued by Kraton Polymers Holdings BV. The recovery rating remains 1, indicating expectations of very high (90%-95%; rounded estimate: 95%) recovery in the event of payment default.

S&P said it expects to withdraw the issue-level ratings on the company's existing $440 million senior unsecured notes when the company fully repays them.

The B+ corporate credit rating and stable outlook on Kraton Corp. and Kraton Polymers LLC are unchanged.

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