Moody's upgrades Ineos Group Holdings senior notes to B1

Moody's Investors Service today upgraded the senior notes rating of Ineos Group Holdings plc and its subsidiaries to B1 from B2. The company's senior implied rating and the rating on the senior secured credit facilities were upgraded to Ba2 from Ba3.

The ratings outlook is stable.

The ratings upgrade reflects Ineos' continuous solid operating and financial performance in a difficult business environment; Moody's belief that no major acquisition, nor any significant capacity expansion is likely to happen and prevent the group from pursuing its solid de-leveraging; the relatively sound market outlook across most of the group's business lines, as well as the revision of the group's financial covenants for the years 2003-2004, providing Ineos with more financial headroom.

Moody's ratings upgrade recognizes Ineos' de-leveraging with a ratio of 4.3 times as of March 31, vs. pro-forma 6.9 times as of Dec. 31, 2000, despite the challenging business and macroeconomic environment in which Ineos has operated since established, Moody's said.

Ineos has benefited from its asset quality and its relative low cost position, as well as very high capacity utilization rates for products like ethylene glycol or hydrofluorocarbons, Moody's said. The rating agency also believes that Ineos will continue to pursue its growth strategy based on low-cost de-bottlenecking and modest bolt-on acquisitions while larger acquisitions or capital investments will be ring-fenced from Ineos Group, as seen with Ineos Capital's investments like Ineos Chlor or EVC.

Although Moody's views the business outlook for chemical companies as generally uncertain, the rating agency views the outlook for certain Ineos products such as ethylene oxide and ethylene glycol, intermediate chemicals used in many applications like polyesters, antifreeze, agrochemicals, surfactants or cosmetics, as rather positive for the next twelve-eighteen months with a limited number of new additional capacity and plants shutdown and growing end-user demand.

Moody's also views positively the long-term swap arrangement Ineos Oxide entered into with Dow, in 2001, providing Ineos with a fixed EO/EG conversion fee and cash flow stability for about 60% of Ineos Oxide's EG volumes. Ethylene, the main raw material used for EO and EG production, is in structural over-supply, leading Moody's to believe that EBITDA for this division is likely to be up again in 2003.

Moody's puts MEPC's ratings on review for downgrade

Moody's Investors Service placed the Ba2 ratings for senior unsecured bonds and issuer rating of MEPC Limited and the B1 rating for MEPC International Capital LP's guaranteed preferred securities on review for possible downgrade.

The rating review follows the announcement earlier this month that five directors are to leave MEPC shortly, and the resultant uncertainties surrounding the company's future operational and financial strategy. The review also reflects concerns about the negative impact on profitability and asset values from a deteriorating business risk profile caused by weak occupational demand in the UK business park market, and reduced financial flexibility following an increase in net debt, Moody's said.

Moody's noted that the recent appointment of a replacement for the departing Chief Executive should expedite finalization of the group's strategy which should take place during the summer, following the management changes.

Moody's rates Teksid notes B2

Moody's Investors Service assigned a provisional B2 rating to the €250 million equivalent in senior notes to be issued by Teksid Aluminum through TK Aluminum Luxembourg Sarl. The outlook is stable.

Moody's said the ratings reflect financial risks from the company's highly leveraged capital structure at approximately 4.9 times pro forma adjusted debt to fiscal 2002 pro forma adjusted EBITDA (3.7x excluding off balance sheet financing); the expectation of negative free cash flow this year and the expected growth in absolute debt levels over the medium-term to fund working capital growth and capital expansion; future growth which is highly dependent on the success of new engine programs as well as overall volume growth in the currently challenging automobile industry; ability to manage growth given its broad geographic and complex structure, particularly with respect to introducing new financial systems and changing to US GAAP accounting standards and competitive threats posed by different local and international automotive suppliers.

More positively, the rating reflects: Teksid Aluminum's leading position in the independent aluminum automotive components industry; Moody's expectation that its product portfolio will continue to benefit from favorable trends within the industry; a diversified customer base and broad geographic footprint; technical integration with OEMs which places the company in a favorable position to capture new business; management's solid operational track record and the presence of a number of strong barriers to entry.

The stable outlook reflects Moody's opinion that while the company is positioned at the lower end of its ratings category, the strength of its existing product portfolio and the flexibility afforded to the business plan by its capital structure should facilitate a strengthening of its rating over time.

S&P rates TK Aluminum notes B-

Standard & Poor's assigned a B- rating to TK Aluminum Ltd.'s planned €250 million notes to be issued through TK Aluminum-Luxembourg Sarl, SCA. The outlook is stable.

S&P said the TK's rating reflects the operating challenges the company must overcome owing to its fast-growing production and its need to improve profits considerably in coming years to ensure timely servicing of its heavy debt burden.

The stable outlook is based on S&P's expectation that TK's credit protection measures will improve gradually in the foreseeable future and make its financial profile commensurate with the rating.

S&P also said it expects free operating cash flow generation to become positive from 2004 or 2005, which would be a significant improvement on its recent track record.

Moody's puts Indofood on upgrade review

Moody's Investors Service put PT Indofood Sukses Makmur Tbk's $280 million Eurobonds issued through Indofood International Finance Ltd. on review for upgrade. The securities are rated B3.

Moody's said the action follows its decision to put Indonesia's B3 foreign currency country ceiling on review for possible upgrade.

Moody's added that Indofood's B1 local currency issuer rating is not affected by the rating action and the outlook remains negative.

Moody's puts 8 Indonesian banks on upgrade review

Moody's Investors Service put eight Indonesian banks on review for possible upgrade. The eight banks are Bank Danamon Indonesia, Bank Internasional Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Permata, Bank Rakyat Indonesia, Bank Tabungan Negara and Pan Indonesia Bank.

Ratings affected include Bank Mandiri's senior debt at B3 and Bank Negara Indonesia's senior debt at B3.

Unaffected ratings include Bank Mandiri's subordinated debt at B3 and Bank Negara Indonesia's subordinated debt at B3.

Moody's said the action follows its decision to put Indonesia's B3 foreign currency country ceiling on review for possible upgrade.

Moody's cuts Okuma

Moody's Investors Service downgraded Okuma Corp.'s senior unsecured long-term debt to B1 from Ba3. The outlook is negative.

Moody's said the downgrade reflects its concerns that the company's profitability will remain under pressure over the intermediate term, delaying the recovery of its financial profile.

The negative outlook reflects Moody's concerns that despite Okuma's cost-cutting efforts, the company may take longer than expected to restore its profitability, given the slow recovery in demand in its key end-use markets.

Due to the rapid deterioration in its end-markets, Okuma's profitability has weakened over the last few years. Its financial condition has consequently deteriorated, reducing its financial flexibility for absorbing future potential losses.

While demand for machine tools has recently shown signs of recovery, the pace is slow and Moody's said it does not expect any rebound to previous peaks. And although the industry's highly cyclical nature has already been incorporated into Okuma's debt rating to a large extent, Moody's is also concerned that its profitability may not recover as strongly as it did previously at the time of an upward industry cycle.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.