world news - 04.04.2008

European paper/forest products companies face continued decline in credit quality

The credit quality of European-based paper and forest product companies is likely to continue to decline as they contend with higher input costs, a strengthened euro and declining demand, according to Moody's Investors Service.

In a new Industry Outlook report examining the main credit implications of developments in the key segments of the paper and forest products industry globally, the rating agency says the overall global credit outlook is negative, based primarily on the twin problems of declining demand and increasing costs.
"These challenges are most pronounced in the mature markets of North America and Europe, where the appetite for most paper and forest products is lessening -— as the migration to electronic media from paper persists amid general economic weakness -— and companies face increasing energy, chemical, transportation and fibre costs. Credit performance for Latin America and Asian producers should fare much better as demand for paper is expected to grow with an emerging middle class and increasing literacy rates," said Ed Sustar, Vice-President -- Senior Analyst and co-author of the report.

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