Moody's rates Ovako CFR & notes B3

Moody's Investors Service said it assigned a corporate family rating of B3 and a probability of default rating of B2-PD to Ovako Group AB.

Concurrently, the agency assigned a B3 rating to the €285 million senior secured notes due 2019 to be issued by Ovako AB (publ).

The outlook is stable.

Together with cash on balance sheet, proceeds from the note issuance will be used to refinance the existing debt facilities and fund transaction expenses. The revolving credit facility will be used for working capital needs and general corporate purposes, and is expected to be undrawn at closing.

Moody's said the B3 corporate family rating reflects Ovako's (a) Exposure to competitive and cyclical end markets, resulting in a highly volatile earnings profile; (b) high opening leverage as a result of deteriorating earnings over the past three years; (c) small size; and (d) limited geographic diversification.

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