Moody's boosts Mercer

Moody's Investors Service said it upgraded the corporate family and probability-of-default ratings of the restricted group of Mercer International Inc. to B3 from Caa1 to reflect the expected impact on liquidity and operating results arising from the recent surge in market pulp prices.

The rating on Mercer's 9.25% senior unsecured notes was upgraded to Caa1 (LGD4, 58%) from Caa2 (LGD4, 58%), and the speculative grade liquidity rating was raised to SGL-2 from SGL-3.

The outlook was changed to positive from stable.

Moody's said the upgrade reflects the longer-term benefits that current market conditions are expected to have on Mercer's liquidity profile and capital structure.

Ratings continue to be constrained by the vulnerability of Mercer's revenues and operating results to highly cyclical commodity pulp prices and exchange rates and the considerable amount of debt in Mercer's capital structure, the agency noted.

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