Moody's reviews Lupatech

Moody's Investors Service said it placed on review for downgrade Lupatech SA's corporate family ratings of Ba3 on the global scale and A3.br on the Brazilian national scale, and the Ba3 foreign currency rating of the $275 million senior unsecured perpetual notes issued by Lupatech Finance Ltd. (Cayman Islands) and jointly and severally guaranteed by Lupatech and its operating subsidiaries.

The action reflects the view that Lupatech has limited ability to reduce leverage over the near term, which considers the weakened operating margins in the past two quarters and expectation that margins should remain constrained by high-cost inventories and lower demand for industrial valves and cast parts, Moody's said.

Net debt-to-EBITDA ratio of 5.4x as of March 31 is excessively high for Lupatech's rating category, according to the agency.

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