S&P Removes General Cable (BGC) from CreditWatch Negative; Affirms 'BB-' Corp. Rating

Standard & Poor's Ratings Services said today it affirmed its 'BB-' corporate credit rating and various issue-level ratings on General Cable Corp. (NYSE: BGC) and removed the ratings from CreditWatch, where we had placed them with negative implications on Oct. 8, 2014. The outlook is negative.

The rating action reflects the company's success in amending its ABL revolving credit facility so that it is able to exclude the repayment of the senior floating rate notes due 2015 and certain other debt payments from its calculation of fixed charges. The company was also successful in selling the stock it owned in an indirect subsidiary in the Philippines for $67 million in cash, proceeds of which were used to repay borrowings under the ABL facility.

General Cable is a global processor and distributor of copper, aluminum, and fiber-optic wires and cables. We view General Cable's large scale and global diversification, with more than 55% of sales outside of North America, as somewhat offsetting the regional demand cyclicality for wire and cable products. Broadly, demand for General Cable's products is driven by residential and nonresidential construction, industrial activity, and infrastructure spending (especially in the electricity sector). We expect near-term demand to be flat, overall, as economic weakness in major markets Brazil, France, and Spain are offset by improving conditions for construction and industrial activity in North America.

The negative rating outlook reflects the possibility of a downgrade in the next 12 months if operating performance is worse than expected such that debt leverage is expected to remain above 5x. This could result from weak macroeconomic conditions in certain global markets. Downside rating risk would increase if the cost restructuring program does not yield anticipated benefits.

We could lower the ratings if adjusted debt to EBITDA is sustained above 5x through mid-2015, which we would view to be indicative of a "highly leveraged" financial risk profile. We could also lower the rating if we determine liquidity to be "less than adequate," which could occur if General Cable experiences weakening operating performance that causes the company's sources of liquidity to be less than 1.2x of its uses of liquidity.

We would revise the outlook to stable when adjusted debt to EBITDA declines below 5x and we view the lower leverage as sustainable. We do not anticipate an upgrade in the next 12 months given our expectation that General Cable's leverage measures will remain "aggressive" (4x-5x EBITDA), at best.

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