S&P downgrades Vallourec

Standard & Poor’s said it lowered the long- and short-term corporate credit ratings on Vallourec to BBB-/A-3 from BBB/A-2.

The agency also said it lowered the long-term issue rating on the group’s senior unsecured debt to BBB- from BBB and short-term issue rating on its commercial-paper program to A-3 from A-2.

The agency said it placed all of its ratings on CreditWatch with negative implications.

The downgrades reflect a significant and unanticipated downward revision of the forecasted EBITDA and credit metrics for Vallourec in 2015 to 2016 following the group’s marked underperformance in the first quarter of 2015, S&P said.

The agency said it now assumes significant EBITDA expansion in 2016 and 2017 after a bottoming out in 2015.

Depressed demand for Vallourec’s oil and gas products is the main impetus behind the now lower profitability than expected in 2015.

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