S&P ups JSG recovery rating, cuts Smurfit bond to B+

Standard & Poor's said it affirmed its B+ corporate credit, B- senior unsecured debt and B- subordinated debt ratings on JSG Packaging Ltd. and related entities. The BB- rated senior secured facilities issued by JSG Acquisitions were affirmed and the recovery rating was raised to 1.

The rating on the 2025 Yankee bond issued by Smurfit Capital Funding Ltd. was lowered to B+ from BB-.

The outlook is negative.

This action follows the signing of a definitive agreement for a merger of parent Jefferson Smurfit Group and Kappa Packaging Group (B+/negative), after which total on-balance-sheet debt will be about €5.2 billion.

The ratings on Smurfit Kappa reflect its highly leveraged financial profile - including very weak cash flow coverage ratios, high debt levels and cyclical industry conditions - and challenges linked to the group's ability to successfully integrate the two entities and to realize expected synergies, the agency said.

These risk factors are balanced by Smurfit Kappa's leading position in the European containerboard/corrugated board markets, good geographical diversification and a high level of forward integrated operations.

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