Trinseo term loans soften in secondary with news of ratings cut by S&P

By Sara Rosenberg

New York, May 26 – Trinseo’s term loans were quoted a few points lower in the secondary market on Friday following news of issuer credit, senior secured and senior unsecured ratings being downgraded by S&P Global Ratings.

The company’s 2024 term loan was quoted at 90 bid, 94 offered, down from 95 bid, 96 offered, and its 2028 term loan was quoted at 77 bid, 80 offered, down from 81 bid, 82 offered, a trader remarked.

The trader added that although the debt was quoted lower on the news, there was no trading in the name during the shortened pre-holiday weekend session.

S&P cut the company’s issuer credit rating and senior unsecured notes to CCC+ from B-, and senior secured loan rating to B from B+. The outlook is negative.

“The downgrade reflects that Trinseo has not yet addressed the upcoming maturity of its $661.7 million TLB, which becomes current in September, and that we anticipate weak 2023 earnings,” the rating release explained.

According to S&P, the company’s first quarter 2023 performance was weaker than the rating agency’s initial expectations, and Trinseo recently lowered its full-year 2023 guidance. S&P now anticipates leverage metrics will remain elevated over the next year, with the projection being for adjusted debt to EBITDA of 8x to 10x over the next 12 months.

S&P attributed Trinseo’s weak sales volume across most reporting segments to continued customer destocking and underlying demand softness across the consumer durables and building and construction end markets.

Trinseo is a Berwyn, Pa.-based materials company and manufacturer of plastics, latex binders and synthetic rubber.

Fund flows

In other news, actively managed loan fund flows on Thursday were negative $242 million and loan ETFs were negative $45 million, market sources said.

Actively managed high-yield bond fund flows on Thursday were positive $57 million and high-yield ETFs were negative $444 million.

Loan funds reported weekly outflows of $614 million including negative $50 million ETFs and high-yield bond funds reported weekly inflows of $1.4 billion including positive $1.6 billion ETFs.

For loans, these were a thirty ninth outflow in the last 40 weeks with actively managed funds experiencing a fifty fifth consecutive weekly withdrawal, sources continued.

Dedicated loan fund AUM is down to $89.4 billion from as much as $142.4 billion in May.

Year to date, outflows for loan funds total $16.5 billion and outflows for high-yield bond funds total $10.9 billion, sources added.

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