Moody's turns Kraton outlook to negative

Moody's Investors Service said it changed the outlook on Kraton Corp. and Kraton Polymers Holdings BV to negative from stable.

“The negative outlook reflects Kraton's weaker earnings in 2023 and higher debt leverage amid soft market conditions, which may continue into 2024. Moody's expects its debt leverage to breach the Ba3 rating trigger for the next several quarters based on recent macroeconomic conditions. Management is taking actions to reduce costs, preserve working capital and improve financial flexibility, which combined with a gradual recovery in demand, could help free cash generation and deleveraging.

“However, failure to lower its leverage or improve its liquidity could result in a rating downgrade,” the agency warned in a press release.

The agency also affirmed Kraton's Ba3 corporate family rating, Ba3-PD probability of default rating, as well as Ba3 ratings on the first-lien term loan facilities.

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