S&P downgrades Vallourec

Standard & Poor’s said it lowered the long-term corporate credit rating on Vallourec to BBB from BBB+ and removed the rating from CreditWatch, where it was placed with negative implications in June following the company’s revised profit guidance.

The outlook is stable.

The agency also said it affirmed the company’s A-2 short-term corporate credit rating.

The downgrades reflect the agency revised down its 2014 to 2015 forecasts for Vallourec’s EBITDA and EBITDA margin, S&P said.

The company’s credit metrics are unlikely to be commensurate with a BBB+ rating before 2016, the agency said.

S&P said it now anticipates a decline in EBITDA in 2014 by about 10% to about €830 million to €850 million with a slight increase in 2015 to 2013 levels.

The downgrades also factor in Vallourec’s various profit revisions over the past few years, resulting from lower orders from Petrobras, a key client, the agency said.

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