Mubasher: Moody's Investors Service has assigned a B1 corporate family rating (CFR) and B1-PD probability of default rating (PDR) to OCTAL Holding, with a stable outlook.
The firm has also assigned B1 instrument ratings to the proposed $300 million senior unsecured notes issued by OCTAL Finance and due in 2023.
The ratings reflect the company’s strong market position in monolayer PET sheet, exposure to relatively stable end markets, proprietary production process allowing for a low cost base and some degree of customer retention, and prudent financial policies including no planned dividend outflows, limited capital investment needs and limited appetite for acquisitions, Moody’s said in a report on Thursday.
The ratings are constrained by the company's concentrated exposure to commodity products, which could lead to volatility in credit metrics in case of a prolonged market downturn because a significant percentage of business is not under contract; limited track record in terms of margin resiliency; concentration of production principally in one facility; and significant customer concentration.
OCTAL also benefits from a strong competitive position in the monolayer PET sheet subsegment of the plastic packaging market in which it claims leading positions in Europe, North America and MENA, the report noted.
