S&P upgrades Oxbow Carbon

S&P said it raised its issuer credit rating on Oxbow Carbon LLC to BB- from B+. The outlook is stable.

At the same time, the agency raised its issue-level rating on the company's first-lien debt (which includes $325 million revolving credit facility due 2022, $225 million term loan A due 2022 and $450 million term loan B due 2023) to BB from BB-. The recovery rating is unchanged at 2, indicating an expectation of substantial (70%-90%, rounded estimate: 80%) recovery for lenders in the event of a payment default.

S&P also raised its issue-level rating on the company's $175 million second-lien term loan B due 2024 to BB- from B. S&P revised the recovery rating to 4 from 5, indicating an expectation of average (30%-50%; rounded estimate: 35%) recovery in the event of default. The recovery revision is based on the reduction in secured debt and valuation revision due to a higher EBITDA multiple.

“The upgrade reflects our expectation that the international demand and price environment for calcined and petroleum coke will allow Oxbow to continue generating sufficient earnings to deleverage its balance sheet over the next 12 months, with leverage anchoring at about 3x by the end of 2018 and moderating to 2.7x by the end of 2019,” S&P said in a news release.

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