S&P lowers Azgard Nine

Standard & Poor's said it lowered its corporate credit rating on Azgard Nine Ltd. to B from B+ in conjunction with the lowering of the agency's sovereign ratings on Pakistan to B. The fertilizer industry, which is one of Azgard's key business segments, is government regulated and dependent on government subsidies.

The outlook is negative.

The agency said the rating on Azgard reflects the company's small market position, its highly leveraged financial profile and the competitive and fragmented textile industry. As of December, the company's debt-to-EBITDA ratio was almost 4.4 times.

These are partly offset by the company's competitive cost advantage, especially in the fertilizer business, and good operating efficiency, S&P said.

The agency added that the State Bank of Pakistan has given Azgard Nine permission to acquire a foreign company for €23.758 million. The target company is a global supplier of many different types of special denim, and the acquisition will be completely debt funded.

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