Ferroglobe affirmed at Caa1 by Moody's on higher revenue but weak liquidity

Ferroglobe PLC was affirmed by Moody's on Jan. 17 at Caa1, with the agency saying that weak liquidity negatively offset improving profitability and higher 2022 projections. Moody's also affirmed Ferroglobe's $350 million of senior unsecured notes due 2022 at Caa3, its $60 million of senior secured notes due 2025 at B2, and its $345 million of senior secured notes due 2025 at Caa2.

Moody's said that Ferroglobe's results in 2021's third quarter "affirmed that the company continues its turnaround in terms of reported EBITDA," with $35 million logged, although significant working capital requirements led to a net cash outflow for the quarter. Moody's revised the company's 2022 performance projections upward because of "significantly higher" silicon metal, silicon-based alloy and manganese-based alloy prices.

The rating agency foresees 2022 revenues of around $2.3 billion, up from an estimated $1.6 billion in 2021, with "substantially improving earnings in 2022-23." But Moody's considers the company's liquidity to be "weak," with unrestricted cash at Sept. 30 of "only" $89 million, noting that liquidity will likely need to be "strengthened over the next few months" as raw material prices rise along with production volumes.

London-based Ferroglobe supplies silicon metal and silicon- and manganese-based specialty alloys and ferroalloys.