S&P gives SGL Carbon convertibles B+

Standard & Poor's said it assigned its B+ preliminary senior unsecured debt rating to the proposed convertible notes due 2013 to be issued by SGL Carbon AG.

At the same time, S&P said it affirmed its BB long-term corporate credit rating on the company.

The outlook is stable.

According to the agency, the ratings on SGL are constrained by its exposure to the cyclical steel industry and by ongoing high raw material and energy costs from a concentrated supplier base. In addition, the group is expanding into high-tech industries and faces rising capital expenditures and working capital needs at a time when it has ended its previous debt reduction program and shifted its strategic focus toward growth.

The ratings are supported, however, by strong market positions, especially in graphite electrodes and improving profitability, owing to higher prices and cost savings, the agency added.

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