Moody's downgrades forest product companies

Moody's Investors Service said it carried out rating actions on six European paper and forest products companies on the back of a significant contraction in demand affecting the industry in the Europe, Middle East and Africa region on top of persistent structural challenges in the global industry.

UPM-Kymmene's senior unsecured rating was downgraded to Ba1 from Baa3, corporate family rating and probability of default rating assigned at Ba1 and outlook is stable.

Stora Enso Oyj's long-term ratings were downgraded to Ba2 from Ba1 and placed under review for possible further downgrade.

Norske Skogindustrier ASA's long-term ratings were downgraded to B2 from B1 and the outlook is stable.

M-real Oyj's long-term ratings were downgraded to Caa1 from B3 and the outlook is negative.

Sappi Ltd.'s outlook was changed to negative from stable on its Ba2 corporate family rating and Ba2 senior unsecured notes issued by Sappi Papier Holding GmbH.

Smurfit Kappa Group plc's outlook was changed to stable from positive on Ba3 corporate family rating and Ba2 probability of default rating on the notes issued by Smurfit Kappa Treasury Funding Ltd. and on the B2 subordinated notes issued by Smurfit Kappa Funding plc.

Lecta's B1 corporate family rating, Ba3 senior secured notes and B3 senior unsecured notes rating were left unchanged with a negative outlook.

The downgrades reflect the significant pressure currently being exerted on demand levels for the majority of paper, packaging and wood products as a result of the global cyclical contraction, Moody's said.

The downgrade also considers an expectation that these pressures will be sustained going forward on top of persistent structural challenges, the agency said. This will further weaken the already depressed cash flow generation ability and debt repayment capability of European paper and forest products companies, the agency added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.