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Moody's upgrades Mercer
Moody's Investors Service said it upgraded Mercer International Inc.'s corporate family rating to Ba2 from Ba3, probability of default rating to Ba2-PD from Ba3-PD and senior unsecured notes to Ba3 from B1.
The speculative grade liquidity rating also is affirmed at SGL-1 and the outlook is stable.
The upgrades are based on an expectation that leverage will be maintained at or less than 2.5x over the next 12- to 18-months following the anticipated close of the Daishowa-Marubeni International Ltd. acquisition by year-end, Moody's said.
The upgrades also consider an expectation that pulp prices will likely decline from current higher-than-normal prices, the agency said.
The ratings benefit from the company's leading global market position in northern bleached softwood kraft. stability provided by material energy and chemical earnings, and the operational flexibility provided through two pulp mills, Moody's said.
The ratings are constrained by the volatile demand and pricing for market pulp, the agency said.
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