S&P upgrades Sappi, debt to BB

S&P said it raised its long-term corporate credit rating on Sappi Ltd. to BB from BB-.

The outlook is stable.

At the same time, the agency affirmed its B short-term corporate credit rating on the company.

S&P upgraded raised its issue rating on the company's outstanding senior unsecured debt to BB from BB-, issued by Sappi Papier Holding GmbH. The recovery rating remains 4, with recovery prospects at 45%.

S&P said the upgrade follows Sappi's strong operating performance in 2016 (financial year ended Sept. 30), which in combination with moderate investments, lack of dividend payments and no acquisitions resulted in credit metrics improving beyond the previous forecast.

As of Sept. 30, the agency calculated Sappi's ratios of funds from operations (FFO) to debt at 29.1% and debt to EBITDA of 2.5 times, which represent a significant improvement compared with 16.4% and 3.9 times, respectively, a year earlier.

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