Ratings agency Standard & Poor“s (S&P) has lowered its long-term corporate credit ratings on Guernsey-registered glass bottle manufacturer Ardagh Glass to “B+“ from “BB-“ because of “an expected …
Ratings agency Standard & Poor“s (S&P) has lowered its long-term corporate credit ratings on Guernsey-registered glass bottle manufacturer Ardagh Glass to “B+“ from “BB-“ because of “an expected deterioration in the group“s credit protection measures”. However, the ratings agency says “the outlook is stable“ for the group which had net debt of EUR 420 million at 30 June 2005. Standard & Poor“s has also cut its subordinated debt ratings on Ardagh Group“s pay-in-kind notes and related entity Ardagh Glass EUR 175 million (USD 211 million) subordinated notes to “B-“ from “B“. “The downgrade reflects Standard & Poor“s expectation that Ardagh will be unable to maintain adequate credit protection measures for the “BB“ rating in the current difficult and deteriorating market conditions,” Vanessa Brathwaite, Standard & Poor“s credit analyst said. “Ardagh has been suffering from high cost inflation, especially from higher natural gas prices”. “With no significant hedging in place, the group remains vulnerable to gas prices.” The giant new bottle plant being built by Quinn Group in north-west England is expected to put further pressure on glass bottle volumes and prices in the UK later in 2005. Despite Ardagh“s recent acquisition of Rexam“s UK glass business, the increased capacity is expected to make it hard for Ardagh to achieve price increases in the previously well-protected UK market, where it had superior margins, according to S&P.