Moody’s reviews K+S for downgrade

Moody's Investors Service said it placed on review for downgrade the Ba2 corporate family rating of K+S AG, the Ba2-PD probability of default rating and the Ba2 rating assigned to its €500 million senior unsecured bond maturing in June 2022.

Moody’s said it placed the ratings on review to assess the effect of the company’s September profit warning on leverage and cash flow generation.

“K+S on September 23, 2019 said that it expects the reduction of fertilizer production for potassium chloride by up to 300,000 tons by the end of 2019 and that it would have a negative impact on 2019 EBITDA by up to €80 million. The company's latest 2019 EBITDA guidance in mid-August was in the range of €730 million to €830 million. Based on the €780 million midpoint of the range, the negative EBITDA impact of up to €80 million would lower EBITDA to around €700 million. Including Moody's adjustments our 2019 debt/EBITDA expectation is now around 5.5x, which is above Moody's guidance range of 4.0x-5.0x for the Ba2. Moody's previous expectation for 2019 leverage was 4.5x,” said Moody’s in a press release.

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