14:08 05.10.2020

S&P upgrades Kernel ratings from 'B' to 'B+'

2 min read
S&P upgrades Kernel ratings from 'B' to 'B+'

Standard & Poor's Global Ratings has raised its long-term issuer and issue credit ratings on Kernel Holding S.A., and its existing senior unsecured notes, to 'B+' from 'B', the outlook is stable.

"Kernel Holding S.A. posted stronger-than-expected results for the financial year ending June 30, 2020 (FY2020), with positive free operating cash flow (FOCF) and adjusted leverage of about 3.0x, thanks to a rebound in sunflower oil prices and increased grain export capacity," S&P said.

S&P forecasted weaker credit metrics in FY2021, with negative FOCF of up to $45 million-$55 million and adjusted leverage metrics of around 3.4x-3.6x, as the company completes its multi-year capital investment program; metrics we view as supportive of a higher rating.

"We view positively that the group is launching new senior unsecured notes to refinance notes due in January 2022, thus improving its debt maturity profile," the rating agency said.

S&P also assigned its 'B+' issue rating to its proposed senior unsecured notes.

Kernel passes successfully our sovereign stress test, which allows us to rate it one notch above the foreign currency sovereign credit rating on Ukraine ('B'), the rating agency said.

"The stable outlook reflects our view that the low risk of disruption on export volumes from the COVID-19 pandemic and significantly lower capex in FY2022 should support cash flows," S&P said.

Kernel is a manufacturer and exporter of sunflower oil.

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