Moody’s lowers GPD

Moody's Investors Service said it downgraded GPD Cos., Inc.'s corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD and senior secured notes rating to Caa1 from B3. Moody's also changed the outlook to stable from negative following the downgrade.

“The company has been negatively impacted by slower growth that resulted in volume declines in fiscal 2023. Moody's expects the global economy to slow down in 2024, which will impact demand for various resins that GPD distributes. We expect the company to show slow volume growth with margin improvement to pre-pandemic levels, but the overall credit metrics will remain weak with leverage projected at around seven times in 2024 and working capital use resulting in negative free cash flow,” the agency said in a press release.

Moody’s noted GPD’s capital structure will need to be refinanced in two years and may add to the interest burden.

“The current interest expense burden is already high and funds from operations before working capital were negative in 2023. The company needs to significantly improve its earnings to generate positive funds from operations and improve its interest coverage,” the agency said.

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