Shares of Hexcel Corp. (NYS:HXL) fell 0.8% in afternoon trading Friday, after the credit of the maker of materials used for commercial aerospace and space and defense industries was downgraded into "junk" territory, with potential for further downgrades. S&P Global Ratings cut Hexcel's issuer credit rating to BB+ , the credit rating agency's highest speculative-grade rating, from BBB-, while the outlook remained negative. S&P said Hexcel's credit metrics are likely to remain weak through 2021 because of the COVID-19 pandemic, as demand for Hexcel's products has been significantly affected by the reduced rebuild rates across all platforms at original equipment manufacturers Boeing Co. (NYS:BA) and Airbus S.E. (OTC:EADSY) (ETR:XE:AIR) . "[D]ue to its position early on in the supply chain, Hexcel has seen a faster and more pronounced drop in its demand because its customers are choosing to use their existing inventory to preserve cash," S&P said. "We expect this destocking to continue into the second quarter of 2021." Boeing credit is rated BBB-, which is S&P's lowest investment grade rating, and Airbus credit is rated A. Meanwhile, S&P rival Moody's Investors Service rates Hexcel credit at Baa3, which is Moody's lowest investment grade rating. Hexcel's stock has tumbled 36.6% over the past 12 months, while the S&P 500 (S&P:SPX) has gained 16.5%.
Feb. 5, 2021, 2:58 p.m. EST