S&P cuts VAT Vakuumventile, loan

Standard & Poor's said it lowered its long-term corporate credit rating on VAT Vakuumventile AG to B from B+.

The outlook is stable.

At the same time, the agency lowered its issue rating on the group's senior secured $405 million term loan B due 2021 to B from B+. The recovery rating on this debt remains unchanged at 3.

Although it continues to assess VAT's financial risk profile as highly leveraged and business risk profile as fair, S&P now expects VAT to achieve lower S&P-adjusted credit metrics than in its previous assumption.

In the updated base case, funds from operations to debt stands at about 4%-6% and debt to EBITDA at 7.5 times to 8.5 times (or 3.5 times to 4.5 times excluding the shareholder loan). These ratios are clearly below previous expectations.

S&P still expects free operating cash flow to remain positive but at a lower level than before. It therefore removed the one-notch positive comparable rating analysis modifier.

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