International credit rating agency S&P Global Ratings (Standard & Poor's Ratings Services) has announced that it has lowered its long-term corporate credit rating for France-based pipe manufacturer Vallourec to 'B' from 'B+'. The outlook is negative.
According to S&P’s statement, the downgrade of Vallourec’s credit rating reflects S&P’s revised expectation that the company’s EBITDA will remain negative in the current year and that recovery of profitability and cash flow generation will take longer than S&P initially anticipated in the context of continued low investment budgets in the oil and gas sector globally and the company’s still high cost position.
Meanwhile, the negative outlook reflects the risks related to the market environment, which could further delay the rebound in Vallourec's EBITDA and cash flow generation. S&P anticipates a material improvement in 2018.