S&P ups Clearwater Paper view to positive

S&P said it improved its outlook for Clearwater Paper Corp. to positive from stable and affirmed all its ratings, including the BB- issuer credit rating, but revised the recovery rating on the company's unsecured notes due 2025 and 2028 to 3 from 4.

“We expect Clearwater to maintain debt leverage of 2.5x-3x in 2022 and 2023, supported by improved cash-flow generation and deleveraging efforts. The company generated $126 million of operating cash and reduced debt by $55 million in the first half of 2022, reducing debt leverage to 2.5x as of June 30, 2022. Tissue and paperboard demand has been strong through the first half of the year, with strong pricing in its paperboard segment,” S&P said in a press release.

However, inflation will remain a problem for the rest of the year, the agency cautioned.

“Pulp, fiber, chemicals, energy and freight costs are the most heavily affected, with pulp inflation at more than 30% year-over-year. Despite these headwinds affecting EBITDA by up to $35 million year-to-date, the company has offset such costs with higher pricing, which has grown EBITDA by more than $65 million over the first half of 2022,” S&P said.

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