OREANDA-NEWS. Moody's Investors Service has downgraded to Ba3 from Ba2 the various financial instrument ratings of Sappi Papier Holding GmbH (SPH), the 100% Austrian subsidiary of Sappi Limited (Sappi) including the now senior unsecured notes and credit facilities. The downgrade brings SPH's ratings in line with the Ba3 corporate family rating (CFR) of its parent, South African pulp and paper company Sappi Limited (Sappi, Ba3 positive). The outlook on SPH's ratings remains positive.

The rating action reflects SPH's decision to exercise its option to release existing security pledged under its loan agreements and bond documentations following certification of compliance for Sappi remaining below the stipulated net leverage threshold of 2.5x for two consecutive quarters (March and June 2016), a condition for the release.

Sappi's Ba3 CFR , Ba3-PD probability of default rating (PDR) and positive outlook are unaffected by this rating action.

The B2 rating of SPH's senior unsecured notes due 2032 is affirmed.