S&P downgrades Ardagh

Standard & Poor's said it lowered its long-term corporate credit ratings on Ardagh Glass Group plc and related entity Ardagh Glass Ltd. to B+ from BB- due to an expected deterioration in the group's credit protection measures. The outlook is stable.

At the same time, S&P lowered its subordinated debt ratings on Ardagh's pay-in-kind notes and related entity Ardagh Glass BV's €175 million subordinated notes to B- from B.

S&P said the downgrade reflects S&P's expectation that Ardagh will be unable to maintain adequate credit protection measures for the BB rating in the current difficult and deteriorating market conditions. Ardagh has been suffering from high cost inflation, especially from higher natural gas prices. With no significant hedging in place, the group remains vulnerable to gas prices that have been very volatile in the last 12 months.

The ratings continue to reflect Ardagh's aggressive financial profile, limited diversification and high dependence on the U.K. food and beverage market. This is in addition to the group's high customer concentration, the agency said.

S&P said these factors are mitigated by Ardagh's leading position and market share in the small but currently lucrative U.K. glass-bottle market. In addition, a large proportion of the group's revenues are covered by multi-year contracts, varying from one to three years.

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