Moody's: Grupo Papelero Scribe view to negative

Moody's Investors Service said it changed Grupo Papelero Scribe's outlook to negative from stable.

The agency also said it affirmed the company's Ba3 corporate family rating, along with the Ba3 rating on its $300 million senior unsecured notes due 2020.

The outlook revision reflects an expectation that Scribe will continue to face operating pressures as a result of import competition and pulp price volatility, Moody's said.

The high pulp prices and levels of imports have negatively affected the company's margins and working capital the past few years leading to elevated leverage and weak cash flow metrics, the agency said.

The ratings are supported by the company's leading presence in the Mexican printing and writing paper and notebook markets with branded and consumer-oriented product content, Moody's said.

The ratings are constrained by the company's material financial leverage, modest interest coverage, modest operating scale and business diversification compared to international paper industry peers, the agency said, and the exposure to competition from imports and commodity input costs.

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