Moody’s cuts Libbey

Moody’s Investors Service said it downgraded Libbey Glass Inc.’s corporate family rating to Caa2 from B3 and probability of default rating to Caa2-PD from B3-PD. At the same time, Moody’s downgraded the rating for the company’s senior secured first-lien term loan to Caa2 from B3 and lowered the speculative grade liquidity to SGL-4 from SGL-3. The outlook is negative.

The downgrades and negative outlook reflect the increased refinancing risk related to the company’s senior secured term loan due April 9, 2021, and the associated risk of constrained liquidity as the term loan facility becomes current in April, Moody’s said.

The rating actions also reflect the heightened risk of a debt restructuring, or that the company will incur much higher cash interest costs as part of a refinancing transaction, such that it meaningfully constrains the company’s future investment capacity and free cash flow generation resulting in operating pressure and an unsustainable capital structure long term.

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