S&P upgrades AEP outlook to positive from stable, expects company to manage higher raw material costs, sell more products; company's planned issue of US$200M in new senior notes receives B rating

NEW YORK , April 5, 2011 () – Standard & Poor's Ratings Services upgraded its outlook for packing company AEP Industries Inc., saying it expects the company to be able to manage higher raw material costs and sell more products.

Standard & Poor's said Tuesday it is raising its outlook to positive from stable and assigned a debt rating of "B" to $200 million in new senior notes AEP said it would issue.

The upgrade came just a day after Standard & Poor's competitor Moody's Investors Service made the opposite assessment, downgrading its outlook on AEP to negative from stable in view of its competitive pricing environment.

Standard & Poor's said AEP should see higher sales volumes and as its costs rise.

"We expect that these trends will lead to an improving financial profile and adequate liquidity, which could warrant a modestly higher rating," Standard & Poor's credit analyst Henry Fukuchi said in a statement.

Moody's said Monday it was worried that AEP would be plagued by thin profit margins because of the competitive market for its packing material. As competitors lower their prices, AEP will be hard pressed to keep decent profit margins, Moody's said.

AEP specializes in making the clear plastic films used to protect many consumer and industrial products. The company plans to use proceeds from its new senior notes to pay down $160 million in existing debt.

Shares of AEP dropped 11 cents, less than 1 percent, to $30.64 in afternoon trading.

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