S&P downgrades Vallourec

S&P said it lowered the long-term corporate credit rating on Vallourec to B+ from BB-.

The agency also said it affirmed the company’s B short-term corporate credit rating and lowered the rating on Vallourec's senior unsecured debt to B+ from BB-.

S&P also said it revised the recovery rating on these instruments to 4 from 3, reflecting 30% to 50% expected default recovery.

The outlook is negative.

The downgrades reflect the more pessimistic assumptions regarding the pace of future improvement in Vallourec's profitability, S&P said.

Management stated at the time of its first quarter results that it did not expect a rebound in markets and, in turn, of its EBITDA in 2016, the agency said.

The U.S. oil country tubular goods markets may continue suffering from weak demand and destocking in the second half of the year, while pricing pressures have extended globally, S&P said.

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