S&P lifts KraussMaffei, notes

Standard & Poor's said it raised its long-term corporate credit rating on Munich Holdings Corp. II Sarl and one of its core subsidiaries, KraussMaffei Group GmbH, to B+ from B.

The outlook is stable.

At the same time, the agency raised its issue rating on the group's existing €260 million senior secured notes to B from B-. The 5 recovery rating remains unchanged and indicates an expectation of modest (10%-30%; lower end of the range) recovery in the event of a payment default.

S&P said the actions reflect KraussMaffei’s robust operating and financial performance throughout 2014 and in the first quarter of 2015, which allowed the group to reduce debt to EBITDA to about 4 times at the end of 2014 from 7.6 times at end-2013.

The improvement in earnings was driven by volume growth and the non-recurrence of purchase price accounting effects that burdened earnings in 2013 – the first year after its buyout to private equity owner Onex.

Also, at the end of 2014, KraussMaffei made an early redemption of 10% of its €325 million notes that led to a slight deleveraging. The group had redeemed another €32.5 million effective July 13. S&P previously assumed only moderate deleveraging, mainly due to its expectations of lower volumes and earnings.

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