S&P Revises Calumet Outlook to Positive on Refinancing

S&P Upgrades Outlook on Successful Debt Management

S&P Global Ratings has revised its outlook on Calumet Inc. to positive from stable, while affirming the company's 'CCC+' credit rating. This decision follows Calumet's successful refinancing of its near-term debt, effectively pushing its next material maturity date to July 2028.

Improved Financial Metrics and Projections

The rating agency anticipates Calumet's credit metrics will continue to strengthen over the next year, driven by favorable market fundamentals and internal optimizations. S&P projects EBITDA margins will improve to approximately 8% in 2025 and approach 10% in 2026. The adjusted debt-to-EBITDA ratio is forecasted to be 7x-8x, improving toward 7x by late 2026.

Renewable Fuel Expansion and Market Risks

A key driver for growth is the company's Montana Renewables LLC unit, which is set to increase sustainable aviation fuel (SAF) production from 30 million to 120-150 million gallons annually by the second quarter of 2026. Despite this positive development and supportive regulations, S&P notes that Calumet remains exposed to commodity price volatility and potential renewable fuel policy changes.

Outlook Summary

Calumet's strategic refinancing has improved its financial stability, warranting the positive outlook. A future rating upgrade to 'B-' is possible if the company consistently maintains its adjusted debt-to-EBITDA ratio below 8x and generates positive free operating cash flow.

FAQ

Q: Why did S&P change Calumet's outlook?
A: The outlook was revised to positive primarily due to the company's successful debt refinancing, which extended its maturity schedule and improved its liquidity profile.

Q: What are the main risks for Calumet?
A: The company faces risks from its exposure to volatile commodity prices and changes in government policies related to renewable fuels.

Source: Investing.com