Moody's: Ardagh outlook stable

Moody's Investors Service said it affirmed Ardagh Glass Group's B2 corporate family rating, the Caa1 rating for the €126.5 million pay-in-kind notes due 2015 and the B3 ratings (LGD5, 71% from 73%) for the €175 million guaranteed senior subordinated notes due 2013 issued by Ardagh Glass Finance BV and the €310 million guaranteed senior subordinated notes due 2017 issued by Ardagh Glass Finance plc.

The outlook was changed to stable from positive.

"Today's rating affirmation reflects Ardagh's solid 2008 financial results," Rainer Neidnig, Moody's lead analyst for Ardagh, said in a statement.

"The outlook change to stable from positive, however, reflects our expectation that the current difficult economic conditions might also impact demand for Ardagh's products. This, together with further restructuring efforts to streamline operations and adjust capacities should make it challenging for Ardagh to achieve and sustain credit metrics commensurate with a B1 rating in the near to mid term."

Ardagh's debt-to-EBITDA ratio fell to 5x.

The rating considers Ardagh's relative size and regional diversification with leading market positions in its core markets of Northern Europe, as well as the limited cyclicality of the company's end markets, the agency noted.

The rating remains constrained by a still weak financial profile characterized by high leverage, volatile raw materials prices or increasing pricing pressure in light of the overall recessionary environment, the agency said.

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