S&P downgrades Ardagh Group

S&P said it lowered its ratings for Ardagh Group SA to B from B+, its senior secured debt to B+ from BB-, Ardagh's unsecured notes to CCC+ from B- and the deeply subordinated $1.7 billion toggle notes issued by ARD Finance SA to CCC+ from B-. Finally, the agency trimmed Ardagh Metal Packaging's senior secured notes to BB- from BB and its senior unsecured notes to B from B+.

Ardagh posted lower-than-expected results for the first nine months of 2023.

“We now forecast adjusted EBITDA and FOCF will fall short of our expectations. We anticipate S&P Global Ratings-adjusted EBITDA of $1.16 billion and negative FOCF of about $525 million for 2023. The group's revenue generation has been undermined by lower-than-expected demand for its glass and metal packaging products due to poorer economic conditions, industry-wide destocking, and customer-specific challenges, for example in the case of a large U.S. beer producer,” S&P said in a statement.

However, “We believe that market conditions could improve in 2024 as industry-wide destocking comes to an end, but do not anticipate a material recovery in demand. Interest rates will likely remain high, and we expect they will continue to undermine consumer confidence. We therefore believe Ardagh's adjusted leverage will likely exceed 10x in December 2023 and December 2024,” the agency added.

The outlook is stable.

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