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Moody's rates Sicpa notes
Moody's Investors Service said it assigned a prospective B1 senior implied rating to NOMA Luxembourg SA, which is the direct owner of Sicpa Holding SA.
Ratings assigned include a prospective B1 senior implied rating to NOMA Luxembourg SA, a prospective B3 rating to the proposed issue of €160 million of senior notes due 2011 at NOMA Luxembourg SA, a prospective Ba3 rating to the CHF 220 million of senior secured credit facilities at Sicpa Holding SA, and a prospective Caa1 unsecured issuer rating to NOMA Luxembourg SA.
The outlook is stable.
Moody's said the senior implied rating reflects: (i) strong competition in the packaging inks market and the potential for further pricing pressure in this sector; (ii) the potential for increased costs associated with implementing health, safety and environmental legislation combined with the potential for further disruption of operating facilities given the flammable nature of the company's products; (iii) the company's dependence on one supplier for the pigments used in certain of its security ink products combined with the requirement to continue to develop new products to maintain its technological advantage; and (iv) the expectation that free cash flow will be constrained over the next three years.
More positively, the rating reflects: (i) Sicpa's leading market position in security inks and the high barriers to entry in this sector; (ii) Sicpa's long standing customer relationships; (iii) the company's technological expertise in security inks; (iv) the relatively stable nature of the security inks and packaging inks markets; and (v) the company's strong geographic spread and diversified packaging inks customer base.
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