Moody's rates Canpack notes Ba2

Moody's Investors Service said it assigned a first-time Ba2 corporate family rating and Ba2-PD probability of default rating to Canpack SA and assigned a Ba2 rating to the proposed $1.1 billion senior notes to be co-issued by Canpack and by its sister company Eastern PA Land Investment Holding LLC (Canpack US) and due 2025 and 2027.

The outlook is stable.

“The Ba2 rating reflects Canpack’s strong market position in the core beverage cans and ends business in a consolidated beverage can industry that displays some barriers to entry, the company's growth track record supported by greenfield projects with pre-contracted capacity, anticipated positive demand trends for beverage cans, and moderate financial leverage with a strong commitment to operate within certain leverage targets,” said Donatella Maso, Moody's vice president – senior analyst and lead analyst for Canpack, in a news release.

“At the same time, the rating is constrained by Canpack’s concentrated product offering and customer base, its partial exposure to fluctuating input prices and currencies, a degree of execution risk associated with its large U.S. greenfield project, the risk of industry overcapacity with negative effect on prices and profitability if the anticipated demand for beverage cans does not materialize, and the expectation of negative free cash flow until 2022 due to the capital invested in growth projects, albeit largely prefunded with the proposed transaction.”

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