Standard & Poor’s Ratings Services (S&P) has lowered its long-term South Africa national scale rating on PPC Ltd. to ‘zaA’ from ‘zaA+’. Simultaneously, it affirmed the ‘zaA-2’ short-term South Africa national scale rating on PPC.
S&P said it expects PPC’s net financial debt to increase materially over the near-term due to its increased capital expenditure on expansion projects in the Sub-Saharan region. The company’s strategy is to grow its Sub-Saharan activity to account for over 40% of total revenue.
Due to the strategy and its costs, S&P has revised PPC’s financial risk profile to “significant” from “intermediate”. It forecast that PPC’s ratio of S&P-adjusted funds from operation (FFO) to debt could decline toward 20% from 29% for the financial year ending 30 September 2014, despite improved operating performance.
