S&P affirms Sappi

S&P said it affirmed its BB long-term and B short-term corporate credit ratings on Sappi Ltd.

The outlook is stable.

At the same time, the agency affirmed the BB issue rating on the group's outstanding senior unsecured debt, issued by Sappi Papier Holding GmbH. The recovery rating remains at 4, indicating an expectation of average recovery prospects (30%-50%; rounded estimate 45%) in the event of a payment default.

“Sappi continues to exhibit robust operating performance, with strong cash flow generation and modest capital investments,” S&P said in a news release.

The agency said that although it now expects Sappi to maintain adjusted debt to EBITDA at or close to 2.5x on the back of a period of gradual deleveraging, debt could potentially rise if management chooses to increase capital expenditure for major expansionary projects or to follow a more shareholder-friendly strategy.

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