S&P might upgrade Ovako

S&P said it placed its B- long-term issuer credit rating on Ovako Group AB on CreditWatch with positive implications.

At the same time, the agency placed its B- issue rating on the €310 million senior secured notes issued by Ovako AB on CreditWatch positive. The recovery rating remains at 4, indicating an expectation of average recovery (30%-50%; rounded estimate 45%) prospects in the event of payment default.

S&P said the CreditWatch placement follows the proposed acquisition of Ovako by Nippon Steel & Sumitomo Metal Corp.

“In our view, after the transaction, Ovako's position within a larger steel conglomerate should boost its credit profile through potential group support,” the agency said in a news release.

“In addition, we anticipate the company will have lower leverage compared with the existing capital structure.”

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