S&P lowers Constellium, rates notes B+

Standard & Poor’s said it lowered its long-term corporate credit rating on Constellium NV to B- from B. The outlook is negative.

At the same time, S&P lowered the issue ratings on Constellium’s senior unsecured notes maturing in 2021, 2023 and 2024 to CCC+ from B. The recovery rating was revised to 5 from 4, indicating expectations of recovery in the lower half of the 10%-30% range in a default scenario.

S&P also assigned a B+ issue rating to the proposed $400 million senior secured notes. The recovery rating on these bonds is 1, reflecting an expectation of 90%-100% recovery in the event of a default.

The downgrade stems from Constellium’s weaker consolidated earnings and credit metrics as a result of weaker-than-expected performance at acquired U.S. can business Wise Metals, S&P said in a news release.

“Constellium’s revised strategy with Wise Metals will not materially improve its leverage, in our view, because we expect Wise Metals’ capital structure will remain unsustainable,” the agency said.

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