VALLOUREC: Russian counter-attack | Stock Exchange area

Like the French football team, Vallourec is mastering the art of counterattacking. Far from being struck by the deterioration of its credit rating by Standard & Poor's of B B-, with a negative outlook, the group paraptrolier, responded immediately. It ensures a solid liquidity and remains confident about compliance with its banking covenants. Vallourec can also count on a reinforcement of size. According to a market source, BoA Merrill Lynch has raised its recommendation, the Buy. Investors appreciate: the stock jumped nearly 10% 2.14 euros.

Last night, Standard & Poor's lowered the rating of the specialist of seamless steel tubes from "B" "B-" and added a new negative outlook, which implies the possibility of further degradation.

Taking the fears already formulated by several badysts in the wake of disappointing quarterly results, the rating agency is concerned about the persistence of a negative operating cash flow available (FOCF), which "continues to break the cash flow of the company, which makes it dependent on its lines of bank credit, especially from the second quarter of 2019 ".

S & P has warned that the continuation of a "deterioration marks the liquidity situation", which would make the group unable to refinance its lines of bank credit or would cause it to break the conditions of these, the "covenants", could lead it to degrade its rating once again.

A scenario of worst cart by Vallourec. The group reminded that it had at September 30, 2018 769 million euros of cash and 2.2 billion euros of medium and long-term bank credit lines confirmed and not drawn.

The company has specified that the ratio of indebtedness withdrawal (the famous banking covenant) was worth 71% at September 30, 2018, far from the 100% fixed ceiling.

In this context, Vallourec has specified that it should respect its banking covenant at the end of 2019.