Moody's upgrades Lecta

Moody's Investors Service said it upgraded Lecta SA's corporate family and probability of default ratings to B1 from B2, along with the rating on its €598 million senior secured floating-rate notes due 2014 to B1 from B2 and its €150 million senior unsecured floating-rate notes due 2014 to B3 from Caa1.

The outlook remains stable.

The upgrade reflects the relatively robust operating performance and cash generation demonstrated by Lecta during the recent challenging quarters, Moody's said.

Despite a significant contraction in demand for coated fine paper in 2009 and high input costs, Lecta was able to gradually enhance profitability on the back of strong pricing execution and prudent cost management, the agency said.

As 2011 unfolds, higher average prices compared to 2010 and a further gradual demand increase should help producers to mitigate the effect of still-elevated input costs, Moody's said.

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