S&P lowers Rayonier Advanced

S&P said it revised the outlook on Rayonier Advanced Materials Inc. to negative from stable and affirmed the BB- long-term issuer credit rating.

The agency also said it affirmed the BB- rating on the company's $550 million senior unsecured notes due in 2024 issued by Rayonier A.M. Products.

The 3 recovery rating is unchanged.

Rayonier announced first-quarter earnings that were materially weaker than the prior year and expectations, S&P explained.

This was primarily due to unplanned outages and higher operating costs at its Temiscaming plant, weak cellulose specialties pricing and mix and the high cost of hardwood fiber, the agency said.

S&P said it now expects adjusted debt-to-EBITDA will exceed 4x and may approach 5x in 2019.

The negative outlook reflects expectations that EBITDA will be meaningfully lower than previous estimates for 2019, with the potential for leverage to reach and exceed 5x if operating results do not return to historical norms in the third and fourth quarters, the agency said.

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