Moody's changes Synthos view to negative

Moody's Investors Service said it changed its outlook for Synthos SA to negative from stable and affirmed the Ba2 long-term corporate family rating, its Ba2-PD probability of default rating, and the Ba2 instrument rating on the €600 million of guaranteed senior secured notes due 2028.

"The negative outlook incorporates the significant decline in Synthos' operating performance in 2023, due primarily to weak demand in the company's key tire manufacturing and construction end-markets, with uncertainty regarding the pace of recovery. As a result, Moody's adjusted leverage in 2023 rose to well outside our expectations for its Ba2 CFR, with only gradual improvement projected over the next two years.

“The EBITDA drop occurred alongside elevated capex and a dividend payment of PLN 300 million (€68 million equivalent based on exchange rates as of June 30, 2023), leading to negative free cash flow (FCF) projected for 2023," said Sebastien Cieniewski, a Moody's vice president, senior credit officer and lead analyst for Synthos, in a press release.

The weaknesses, however, are softened by positive fundamentals for the company’s key markets, such as improving the tire industry’s environmental credentials and shrinking energy consumption from better building insulation, the agency said.

Additionally, Moody's said it anticipates reduced capital expenditures and Synthos' commitment not to pay dividends in 2024 will help free cash flow generation over the next 18 to 24 months and for it to deploy excess cash to repay borrowings under the €500 million revolving credit facility.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.