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BASIC INDUSTRIES: Amcor (AMCR Baa2*-/BBB/NR), Berry Global: Moody’s Actions

BASIC INDUSTRIES
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Moody’s took a harsher line than S&P here, with a negative outlook starting point. Divestments and future financial policy are likely to be key outcome drivers. Shareholder returns have more than consumed FCF over recent years, albeit with small positive retained cash this year. Halting buybacks would help only somewhat given sizeable dividends.

  • Moody’s sees Amcor leverage rising to 4x proforma on the acquisition against a 3.5x ratings ceiling. While it expects deleveraging to 3.2x at FY27, execution risk is perceived as high on the size of the transaction and planned divestitures and synergies.
  • Ratings were already on outlook negative with metrics stretched. Moody’s expects FCF / debt to remain well below the 10% rating threshold absent a change to shareholder returns policy.
  • The review for upgrade on Berry doesn’t add much beyond that. Rating convergence seems likely depending on the ultimate capital structure.
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Moody’s took a harsher line than S&P here, with a negative outlook starting point. Divestments and future financial policy are likely to be key outcome drivers. Shareholder returns have more than consumed FCF over recent years, albeit with small positive retained cash this year. Halting buybacks would help only somewhat given sizeable dividends.

  • Moody’s sees Amcor leverage rising to 4x proforma on the acquisition against a 3.5x ratings ceiling. While it expects deleveraging to 3.2x at FY27, execution risk is perceived as high on the size of the transaction and planned divestitures and synergies.
  • Ratings were already on outlook negative with metrics stretched. Moody’s expects FCF / debt to remain well below the 10% rating threshold absent a change to shareholder returns policy.
  • The review for upgrade on Berry doesn’t add much beyond that. Rating convergence seems likely depending on the ultimate capital structure.