Moody's rates Trinseo notes B3

Moody's Investors Service said it assigned B3 ratings (LGD5, 86%) to the proposed $450 million senior notes of Trinseo Materials Operating SCA due 2018.

Trinseo Materials Operating's guaranteed senior secured first-lien revolver due 2015 was revised to Ba3 (LGD3, 32%) from B1 (LGD3, 49%) and guaranteed senior secured first-lien term loan due 2016 to Ba3 (LGD3, 32%) from B1 (LGD3, 49%).

TMO, formerly known as Styron Sarl, will use proceeds from the notes to repay borrowings under its term loan B. The co-borrower under the new agreement is Trinseo Materials Finance, Inc.

The outlook is stable.

"Trinseo's latex and rubber businesses have generated a relatively consistent level of operating earnings despite volatile feedstock costs, whereas its plastics and engineered polymers businesses suffer from substantial quarter to quarter earnings volatility," John Rogers, a senior vice president at Moody's, said in a statement.

"Profitability should improve in the fourth quarter due to the recent decline in raw material costs; if fourth quarter EBITDA remain below $60 million, we would likely move to a negative outlook."

Moody's said it also moved the corporate family and probability-of-default ratings from Styron Sarl to Trinseo SA who is a guarantor of the credit facility and notes.

Trinseo's B1 corporate family rating reflects its narrow portfolio of commodity and quasi-commodity products, weak credit metrics, exposure to volatile feedstock prices, its limited history as an independent company and limited amount of cash equity, the agency said.

Trinseo's credit profile is supported by leading market positions in three of its four product lines, relatively stable volume demand in its emulsion polymers and rubber businesses, and an experienced management team, the agency noted.

Trinseo has a debt-to-EBITDA ratio of about 4.9x.

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