Moody's: Lecta view negative

Moody's Investors Service said it changed the outlook for Lecta SA to negative from stable.

The Ba3 corporate family rating, the Ba3 rating for the €598 million senior secured floating-rate notes due 2014 and the B1 rating for the €150 million senior unsecured floating-rate notes due 2014 were left unchanged.

The outlook reflects "the higher likelihood that Lecta's key credit metrics could still during 2008 slip below thresholds that Moody's expects for a Ba3 rating absent any price increases and against the risk of rising input costs," Martin Kohlhase, Moody's analyst, said in a written statement.

"Indeed, announced price increases for coated fine paper have not materialized during 2007, largely due to a highly competitive market resulting from a repatriation of exports into the European market on the back of the weak U.S. dollar," Kohlhase said.

Moody's said ratings could be pressured further if the company's debt-to-EBITDA ratio were to grow above 5 times.

The Ba3 corporate family rating reflects Lecta's strong business profile, the agency said.

The rating remains constrained primarily by the adverse market conditions and the low degree of pulp integration exposing the company to swings in the pulp price, Moody's said.

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