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BASIC INDUSTRIES: Kingspan (KSPID NR/BBB/BBB): Credit Profile

BASIC INDUSTRIES
BulletCredit Bullets
  • Building products business; predominantly insulation, with complimentary roofing, walling, light, air and water materials. Number 1 in Europe and the US for insulation panels. 85% of sales driven by energy efficiency. 70% in sales are in Europe, which is a less profitable market than the US.
  • Commitment to strong BBB rating. Targets 1-1.5x net leverage, which was exceeded slightly only in 2022 due to elevated expansion capex. It has a 2x ceiling for M&A, to be followed by deleveraging. S&P’s adjusted leverage is around 0.3x higher. S&P had expected 1.7-1.9x gross this year, trending below 1x in 2026.
  • S&P has potential rating upside triggers of FFO/debt above 60%, gross leverage below 1.5x and FOCF to debt sustainably above 40%. Its forecasts see these met in 2026, assuming no M&A activity.
  • Kingspan is smaller in scale than peers, apart from Imerys. Leverage is lower, so are margins. We would put fair value wide to HEIGR, which itself looks somewhat tight to HOLNSW. With that in mind, we see FV around MS+125-135 for 7Y.
  • We don’t consider ESG here, but that could potentially justify a tighter spread.
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  • Building products business; predominantly insulation, with complimentary roofing, walling, light, air and water materials. Number 1 in Europe and the US for insulation panels. 85% of sales driven by energy efficiency. 70% in sales are in Europe, which is a less profitable market than the US.
  • Commitment to strong BBB rating. Targets 1-1.5x net leverage, which was exceeded slightly only in 2022 due to elevated expansion capex. It has a 2x ceiling for M&A, to be followed by deleveraging. S&P’s adjusted leverage is around 0.3x higher. S&P had expected 1.7-1.9x gross this year, trending below 1x in 2026.
  • S&P has potential rating upside triggers of FFO/debt above 60%, gross leverage below 1.5x and FOCF to debt sustainably above 40%. Its forecasts see these met in 2026, assuming no M&A activity.
  • Kingspan is smaller in scale than peers, apart from Imerys. Leverage is lower, so are margins. We would put fair value wide to HEIGR, which itself looks somewhat tight to HOLNSW. With that in mind, we see FV around MS+125-135 for 7Y.
  • We don’t consider ESG here, but that could potentially justify a tighter spread.