Jul. 2 at 11:58 PM
Moody’s Ratings downgraded Mercer International’s corporate family rating to Caa3 from Caa1, warning that the company faces an increased risk of a distressed debt exchange or broader balance-sheet restructuring. The agency also lowered Mercer’s probability of default rating to Caa3-PD and cut its senior unsecured debt rating to Ca, while maintaining a stable outlook and its SGL-4 speculative-grade liquidity assessment.
The downgrade reflects expectations of persistently high leverage, weak interest coverage, and negative free cash flow through at least 2027, driven by higher fiber costs, weak pulp prices, and soft demand. Moody’s also highlighted liquidity concerns, as Mercer’s revolving credit facilities mature in January and September 2027.
According to the agency, Mercer has about
$210 million in liquidity sources versus roughly
$294 million of expected cash needs through the end of 2027.
$MERC