S&P moves Osmose outlook to negative

S&P said it changed its outlook for Osmose Utilities Services Inc. to negative from stable and affirmed its B ratings on the issuer and its first-lien term loan and revolving line of credit. The recovery ratings remain 3, indicating meaningful recovery.

Citing inflation in materials and labor costs, the agency said it expects Osmose to report weaker performance than previously forecasted.

“The negative outlook reflects the risk of elevated adjusted debt leverage above our threshold of 6.5x this year due to inflationary cost pressures. Although we anticipate 2022 EBITDA margins to decline from 2021 levels, we assume operating performance will improve as Osmose recoups higher costs through price increases, with adjusted debt leverage decreasing to around 6.5x in 2023,” S&P said in a press release.

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