S&P downgrades Ovako

Standard & Poor’s said it lowered the long-term corporate credit rating on Ovako AB to B- from B.

The agency also said it lowered the rating on Ovako’s €300 million senior secured notes maturing 2019 to B- from B in line with the corporate credit rating.

The recovery rating remains at 4, indicating 30% to 50% expected default recovery.

The outlook is negative.

The ratings reflect the deterioration of Ovako’s European engineering steel markets in 2015, materially reducing EBITDA and translating into leverage substantially more than 8x, S&P said.

Consequently, the group’s free operating cash flow turned modestly negative and adjusted debt-to-EBITDA rose to about 11x, the agency said.

The agency also said it anticipates that market conditions in the steel industry could remain depressed over the coming quarters, restricting free operating cash flows at minimal levels and resulting in limited ability to reduce leverage, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.