S&P: Kraton view to positive, rates notes B-

S&P said it revised the outlook on Kraton Corp. and Kraton Polymers LLC to positive from stable and affirmed their B corporate credit ratings.

The agency also said it affirmed the B+ rating on the Kraton's existing senior secured debt. The recovery rating remains at 2, indicating 70% to 90% expected default recovery.

S&P also said it also raised the rating on the company's existing $440 million senior unsecured notes to B- from CCC+ and revised the recovery rating to 5 from 6.

The 5 recovery rating indicates 10% to 30% expected default recovery.

S&P also said it assigned a B- rating and 5 recovery rating to the company's proposed $400 million unsecured notes.

The proceeds will be used to repay a portion of its $1.278 billion term loan.

The ratings reflect the impact of an evolution in the proportion of the company's enterprise value generated at obligors versus that generated at non-obligors, S&P said.

Kraton's obligors account for about 50% of consolidated EBITDA and non-obligors generate the other half, the agency said.

The outlook revision reflects an expectation that Kraton's EBITDA will continue to improve due to increased sales and cost-saving measures, resulting in gradually improving credit metrics over the next 12- to 24-months, S&P said.

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