Moody's upgrades Ilim Timber

Moody's Investors Service said it upgraded the corporate family rating of Ilim Timber Continental SA to B2 from B3 and probability of default to B2-PD from B3-PD.

The outlook is changed to positive from stable.

The upgrades are based on an expectation that the company will be able to sustain its reduced leverage, pursue a prudent financial policy and maintain healthy liquidity and positive free cash flow, Moody's said.

The ratings reflect the company's improved leverage, completed refinancing of its debt, substantially improving maturity profile and reducing interest burden and robust liquidity, the agency said.

The upgrades reflect an expectation that the company will pursue a balanced financial policy with positive free cash flow generation and continue to focus on gradual debt reduction over the next 12- to 18-months, Moody's said.

The ratings are constrained by the company's low product portfolio diversification because about 72% of the company's sales are represented by sawn timber, a market characterized by seasonality and volatility in terms of volumes and prices, the agency said.

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