S&P rates U.S. packaging companies mostly speculative-grade in new report; metal, glass, plastic packaging demand this year expected to be 'stable to slightly greater,' 'flat to slightly declining' for foodservice and protective packaging

Graziela Medina Shepnick

LOS ANGELES , April 18, 2012 (Industry Intelligence) –

U.S. packaging companies rated by Standard & Poor’s are doing fairly well overall, but the outlook calls for generally little to no improvement, reported Reuters on April 18.

S&P’s newly released report on RatingsDirect, titled Ratings on U.S. Packaging Companies Mostly Speculative Grade, Yet Stable, indicates that the gradual economic recovery is helping support stable ratings in the sector.

Of the 24 packaging companies covered, 21 of them are rated speculative-grade, with a BB+ or lower. With more than half of these B+ or below, it suggests a vulnerability to even slight changes in business conditions.

Food and beverage packaging demand has been relatively stable and cost increases have filtered down to customers “quickly,” said Liley Mehta, S&P credit analyst, Reuters reported.

S&P projects that demand for metal, glass and plastic packaging will be “slightly greater” this year, in line with “modest economic growth;” however, foodservice and protective packaging segments are forecast to be “flat to declining,” Mehta said.

The new report notes “only three negative outlooks” for packaging and rates most companies’ liquidity as “adequate.” S&P states that most of its rating outlooks are stable, and not many upgrades are expected for the remainder of 2012, reported Reuters

The primary source of this article is Reuters, London, England, on April 18, 2012.

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