S&P cuts Carpenter Technology

S&P said it downgraded Carpenter Technology Corp. and its unsecured notes to BB from BB+. The 3 recovery rating on the notes is unchanged.

“While Carpenter Technology Corp. has been improving its credit metrics, they've remained weak for the rating for two consecutive years in the wake of the coronavirus pandemic. The pace of the company's post-Covid recovery highlights its reliance on the aerospace industry and challenging competitive position as a small player in this market,” the agency said in a statement.

However, S&P noted, “The company's credit metrics are improving, though it will take some time for it to return its earnings and ratios to pre-pandemic levels despite the broader industry recovery. Carpenter's leverage is still elevated but we expect its debt to EBITDA will trend below 4x over the next couple of quarters. The momentum in the company's earnings recovery is illustrated by its backlog, which has increased by 107% compared with the same period a year ago.”

The outlook is stable.

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