Fitch gives Synthos BB, notes BB+

Fitch Ratings said it assigned Synthos SA a first-time long-term issuer default rating of BB with a stable outlook and its proposed €500 million of notes an expected senior secured rating of BB+ with an RR2 recovery rating.

“The IDR of Synthos is constrained by its modest scale, exposure to the transportation and construction sectors, price volatility of butadiene and styrene derivatives as well as our expectation of funds from operations (FFO) net leverage of around 3x over 2021-2024. The expected acquisition of synthetic rubber assets from Trinseo LLC, Synthos's net debt/EBITDA target of 2x-2.5x and a lack of a clearly defined dividend distribution framework will not, in our view, support material deleveraging,” Fitch said in a press release.

The outlook reflects an expectation that pro forma of the acquisition, EBITDA will recover to an average of PLN 1.2 billion over 2021-2024, from around PLN 0.9 billion in 2020, and that it will have sufficient cash flow generation to cover planned investments, the agency said.

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