S&P downgrades Bis

Standard & Poor’s said it lowered the corporate credit rating on Bis Industries Ltd. to B- from B.

The agency also said it lowered the rating on the company’s related entity, Artsonig Pty Ltd.’s payment-in-kind notes to CCC from CCC+.

The recovery rating on the notes is 6, reflecting 0 to 10% expected default recovery.

The outlook is negative.

The company’s financial risk profile will continue to deteriorate due to weak underlying demand conditions and its highly leveraged capital structure renders it vulnerable to deteriorating trading conditions, S&P said.

While the company is not directly exposed to end-market demand, recent price volatility has prompted mine owners to become increasingly focused on cost reduction, the agency said.

The company’s contract structure and production focus previously provided some insulation from the cyclicality and volatility, S&P said, but the severity of recent price movements forced mine owners to more closely scrutinize their cost positions.

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