S&P rates Synthos CCR BB

S&P said it affirmed the BB long-term corporate credit rating on Synthos SA.

The outlook is stable.

The agency also affirmed the BB rating on the €400 million 4% senior unsecured notes due 2021 issued by Synthos Finance AB and guaranteed by key operating subsidiaries of the group.

S&P assigned a recovery rating of 4 to the senior unsecured notes because Poland's jurisdiction is now covered under the recovery criteria.

The 4 recovery rating indicates 30% to 50% expected default recovery.

S&P also said it assigned a BB corporate credit rating to Synthos Finance as it is considered core to the Synthos SA group because it is issuing the group's unsecured instruments, which are guaranteed by key operating subsidiaries of the group.

The outlook is stable.

The ratings reflect a view that Synthos should be able to strengthen its credit metrics over the next 12 to 18 months, S&P said.

The agency expects Synthos to generate adjusted EBITDA of about 1 billion in Polish zloty and improve its adjusted debt-to-EBITDA ratio to about 2x in 2017 to 2018, this after 2.4x in 2016.

This is due to the rise in feedstock prices in 2017, including for butadiene, which is expected to remain high in the next few years, S&P said.

The ratings also consider the company's moderate size and limited portfolio diversification, highly commoditized production profile, high volatility of profitability and exposure to volatile end markets, the agency said.

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