S&P ups Mercer

Standard & Poor's said it raised the long-term corporate credit rating on Mercer International Inc. to B+ from B.

The outlook is stable.

S&P raised the issue-level rating on Mercer's senior unsecured debt to B+ from B and revised the recovery rating on the debt to 3 from 4. A 3 recovery rating indicates expectations of meaningful (50%-70%) recovery in a default scenario.

The upgrade considers the company's debt reduction, stable cash flows from electricity generation and strong credit metrics, the agency said.

The ratings on Mercer reflect the view of the company's limited product diversity, significant earnings volatility for its single product and its vulnerability to changes in foreign exchange rates, the agency added.

These weaknesses are mitigated in part by the company's low cost position, good market position in the northern bleached softwood kraft pulp industry and stable electricity revenues that cover annual interest expense, S&P said.

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