S&P upgrades Kraton

S&P said it raised Kraton Corp.’s issuer rating to BB- from B+ and its euro-denominated term loan to BB+ from BB. The 1 (95%) recovery rating is unchanged.

The agency, however, affirmed the issue-level rating on Kraton’s unsecured notes at BB- but revised the recovery rating to 3 from 2, reflecting the expectation of meaningful (50%-70%; rounded estimate: 65%) recovery in default.

“We anticipate 2021 EBITDA will strengthen considerably relative to pandemic-level earnings in 2020. Kraton's first-half 2021 operating results exceeded our initial expectations as it continued to increase margins and EBITDA levels stemming from positive pricing actions and the strong economic rebound in its end markets. The earnings recovery combined with meaningful debt reduction in early 2020 will boost leverage metrics to levels above our previous assumptions,” S&P said in a press release.

The outlook is stable.

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