S&P: Preem unaffected

Standard & Poor's said its ratings and outlook on Preem Holdings AB (BB-/stable) were unchanged following an announcement by its owner, Corral Petroleum Holding AB, that it plans to issue €500 million of payment-in-kind notes.

In issuing this additional debt-like liability Preem is using up most, if not all, of its current financial flexibility, increasing the likelihood that the company could be downgraded should the economic environment deteriorate, the agency said.

S&P noted Preem is benefiting from an extremely cash flow generative refining market at the moment, however, and is expected to continue to do so until the end of 2005 at least.

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