S&P cuts Kraton

Standard & Poor's said it lowered the senior debt rating on Kraton Polymers LLC, Kraton Performance Polymers Inc. and all of its subsidiaries to B+ from BB- and revised the recovery rating to 5 from 4, indicating the expectation of modest (10% to 30%) recovery in the event of a payment default.

Kraton's BB- corporate credit rating and stable outlook remain unchanged.

The downgrade resulted from S&P's updated recovery analysis following changes to Kraton's proposed capital structure, S&P said.

The ratings on Kraton reflect its significant financial risk profile and weak business risk profile, stemming from the company's narrow focus on the styrenic block copolymers market, vulnerability to raw material price fluctuations and exposure to cyclical demand cycles, the agency said.

The ratings also consider the company's ongoing efforts to maintain favorable pricing relative to raw material market fluctuations, good geographic and end market diversification, improved operating efficiencies through various cost reductions and improved financial profile, S&P said.

The debt-to-EBITDA ratio was 2.1 times as of Sept. 30.

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