Switzerland-domiciled aseptic carton packaging manufacturer SIG Combibloc Group AG (SIG) continues to generate positive free operating cash flow (FOCF) and reduce its debt. Following financial sponsor Onex's reduced ownership stake, we expect leverage to remain comfortably below 3.5x and funds from operations (FFO) to debt to improve to above 25% in the next 12 to 18 months, as financial policy risk moderates. We are therefore revising our outlook to positive from stable. At the same time, we are affirming our 'BB+' long-term issuer credit rating and issue ratings. The positive outlook reflects a one-in-three chance of an upgrade if SIG maintains leverage below 3.5x and achieves FFO to debt of more than 25% over the next 12 to 18 months.
