(Editor's Note: S&P Global Ratings believes there is a high degree of unpredictability around policy implementation by the U.S. administration and responses--specifically with regard to tariffs--and the potential effect on economies, supply chains, and credit conditions around the world. As a result, our baseline forecasts carry a significant amount of uncertainty. As situations evolve, we will gauge the macro and credit materiality of potential shifts and reassess our guidance accordingly [see our research here: spglobal.com/ratings].)
This report does not constitute a rating action.
Key Takeaways
- We expect U.S. containers and packaging issuers will be largely insulated from direct effects of tariffs.
- However, we view market volatility created by trade tensions as the most imminent credit risk for the U.S. containers and packaging industry.
- Additionally, inflationary risks from tariffs could keep interest rates higher for longer, leading to higher interest burdens and lower cash flows for some companies.
We expect U.S. containers and packaging issuers will be largely insulated from direct effects of tariffs. This is supported by characteristics of the industry, including supply chains that typically source materials in the region they produce, and manufacturing facilities that are located in close proximity to customers, limiting the amount of direct tariff exposure. However, issuers that use aluminum and steel inputs will have some direct effects from tariffs. Though beverage cans are mostly made from recycled aluminum, primary aluminum input is generally imported. However, we expect companies will pass-throughs costs to customers in the form of higher prices, which we believe will be effective enough to offset most of the cost increase. Containerboard products issuers are largely vertically integrated into their box operations, but manufacturers export a smaller amount of their production. We believe exposures can be mitigated by shifting production to different regions, but also expect disciplined pricing will remain a focus for the industry.
However, we view market volatility created by trade tensions as the most imminent credit risk for the containers and packaging industry. S&P Global expects U.S. GDP growth of about 1.5% in 2025 and 1.7% in 2026, with core consumer price inflation (CPI) of 4%. Though cost pass-throughs will mitigate rising input costs, the diminishing buying power of consumers due to inflation and sustained high interest rates can disrupt demand. During the sudden destocking period beginning in 2023, curtailments of production led to economic downtime of manufacturing facilities, as well as permanent closures of older inefficient capacity, which decreased volumes. This then led to top line declines, while lower operating leverage took a bite out of companies' EBITDA margins. Furthermore, though many issuers have exposures to the more stable food and nondiscretionary end markets, many sell into discretionary markets that will become increasingly challenged as consumer confidence wanes. Even within the food category, we have seen changes in consumer behavior from the run-up in prices--forgoing impulse purchases, eating out less, and switching to private-label brands. These factors can disrupt issuers that depend on end-market exposures.
Additionally, continued inflationary risks from tariffs could keep interest rates higher for longer, leading to higher interest burdens and lower cash flows for some companies. S&P Global economists expect the Federal Reserve will implement just one rate cut of 50 basis points this year given the risk of inflation. This will result in sustained higher interest burdens, which will lower cash flows for packaging issuers and increase credit risk for lower-rated issuers that have limited cash flows. Investor risk aversion has also increased, which could require issuers to refinance at even higher rates, further pressuring cash flows; or, a greater credit risk could be some issuers might be frozen out of the debt markets entirely. However, as mentioned in our last newsletter, most issuers used the previously robust market to refinance and push out debt maturities, with only a handful of issuers with material maturities over the next two years. (See "U.S. Containers & Packaging Newsletter: New Year, New Risks For Issuers As Slow Growth Settles In, Feb. 4, 2025," published Feb. 4, 2025 on RatingsDirect.)
We continue to scrutinize containers and packaging issuers given our revised economic forecasts. This includes: a review of tariff exposures; effects on earnings and cash flows; potential mitigating actions; liquidity risk and debt maturities; and ratings headroom.
In our preliminary review, we have defined the following risk categories:
High risk: Indicates the possibility for a negative rating action or outlook revision in the next 6-12 months if we believe there is limited ability to offset direct or indirect effect of proposed tariffs on a sustained basis. These companies may have high exposure to tariffs or lower cushion on their downgrade triggers (even before tariff consideration), to absorb large incremental margin or cash flow shortfalls.
Medium risk: Indicates a lower likelihood of a negative rating action or outlook revision over the next 12 months due to a reasonable cushion on credit metrics and liquidity, or lesser exposure to direct or indirect effects of proposed tariffs, or some ability to mitigate the effects through cost management or greater financial flexibility given strong liquidity and free cash flows.
Low risk: Indicates substantial cushion on credit metrics or minimal exposure to the to direct or indirect effects of proposed tariffs.
These indicators are intended to highlight issuers we are monitoring for a potential negative rating action or outlook change due to the economic volatility caused by tariffs and is not a certain likelihood that a rating action will be taken in the next 6-12 months.
Table 1
| U.S. containers and packaging companies | |||||
|---|---|---|---|---|---|
| Issuer | Rating | Outlook | Risk Indicator | Comments | Downside Leverage/Other |
| Altium Packaging LLC | B+ | Stable | High | Little cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Exposure to cyclical consumer end-markets such as beverage and personal care. | 7x |
| Anchor Glass Container Corp. | CCC+ | Negative | High | Company has maturities that will become current in June 2026. Large exposure to spirits could pressure performance if weaker macroeconomic conditions persist and alcoholic beverage consumption declines. | Liquidity/cash flow constraints or refinancing risk |
| BW Holding Inc. | CCC+ | Stable | High | Limited liquidity to withstand direct or indirect effects on earnings and cash flows. | Liquidity risk or distressed restructuring |
| Golden West Packaging Group LLC | CCC- | Negative | High | Very limited liquidity and currently being supported by equity contributions from sponsor. | Distressed restructuring or default |
| LABL Inc. | B- | Negative | High | Little to no cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Moderate exposure to wine and spirits could pressure performance if weaker macroeconomic conditions persist and alcoholic beverage consumption declines. Debt maturities in July 2027. | Liquidity constraints or refinancing risk |
| Mauser Packaging Solutions Holding Co. | B | Stable | High | Little cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Large exposure to industrial end markets could lessen this cushion if weaker macroeconomic conditions persist. Significant debt maturity wall in April 2027, when the majority of its outstanding debt becomes due. Mauser has historically demonstrated an ability to adjust its selling prices to reflect changes in the price of steel and we believe direct effects of tariffs will be modest. | 8x or 1.5x EBITDA interest coverage or cash flow constraints or refinancing risk |
| Poseidon Investment Intermediate L.P. | CCC | Negative | High | Little to no cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. | Cash flow constraints |
| Pregis Topco LLC | B- | Stable | High | Cushion on credit metrics is offset by exposure to the e-commerce end market. Debt maturities in August 2026. | Liquidity/cash flow constraints or unsustainable capital structure |
| RLG Holdings LLC | B- | Stable | High | Little to no cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. | Liquidity constraints or unsustainable capital structure |
| Trident TPI Holdings Inc. (Tekni-Plex) | B- | Negative | High | Little to no cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow given high interest expense and capex requirements. | Liquidity/cash flow constraints |
| Valcour Packaging LLC | CCC+ | Stable | High | Little to no cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Material exposure to discretionary end-markets could make generating cash flows challenging, particularly when the PIK optionality on some debt falls away at the end of 2025. | Liquidity/cash flow constraints |
| Ranpak Holdings Corp. | B | Stable | High | Little cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Small scale and product diversification, coupled with high exposure to the e-commerce end market could result in additional volatility. | 6.5x |
| O-I Glass Inc. | BB- | Stable | Medium | Little to no cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Large exposure to wine, spirits, and beer could pressure performance if weaker macroeconomic conditions persist and alcoholic beverage consumption declines. | 5x |
| Secure Acquisition Inc. | B- | Stable | Medium | Cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flows, somewhat offset by exposure to shipping and handling end markets. | 1.5x EBITDA interest coverage or liquidity/cash flow constraints |
| Silgan Holdings Inc. | BB+ | Stable | Medium | No cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flows vs downside triggers. Could see some indirect pressures in demand, particularly within metal containers segment, but generally source materials and produce packaging in regions where products are consumed. | 4x |
| TriMas Corp. | BB | Stable | Medium | Little to no cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Strong performing Aerospace segment expected to mitigate indirect risk in more cyclical end markets, such as beauty. | 3x |
| Veritiv Operating Co. | B+ | Stable | Medium | Little to no cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flows vs downside triggers. North American distributor of value-added packaging products and services across various end markets, which should provide some stability. | 5x or FOCF-to-debt below 5% or liquidity constraints |
| Zinc-Polymer Parent Holdings | B- | Stable | Medium | Little cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flows. Large exposure to cyclical consumer end markets, such as retail. | Liquidity/cash flow constraints or an unsustainable capital structure |
| Anchor Packaging LLC | B | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Large exposure to defensive food end markets. | 6.5x |
| AptarGroup Inc. | BBB- | Positive | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Strong performing Pharma segment expected to mitigate indirect risk in more cyclical end markets, such as beauty. | 2x |
| Avery Dennison Corp. | BBB | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Large exposure to apparel, industrial, and logistics end markets could lessen this cushion if weaker macroeconomic conditions persist. | 3x |
| Ball Corp. | BB+ | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow following Aerospace sale. Large exposure to beer could lessen this cushion if weaker macroeconomic conditions persist and alcoholic beverage consumption declines. However, aluminum beverage can companies have historically demonstrated an ability to pass-through higher aluminum costs due to tariffs and we believe direct effects will be minimal. | 5x |
| Berlin Packaging LLC | B- | Stable | Low | Solid liquidity position and cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Distributor servicing wide range of end markets, provides for some diversification. | 1.5X EBITDA interest coverage |
| Charter Next Generation Inc. | B | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Large exposure to defensive food end markets expected to mitigate risk in more cyclical end markets, such as e-commerce and industrial. | 7x |
| Closure Systems International Group Inc. | B | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. | 6.5x |
| Clydesdale Acquisition Holdings Inc. | B+ | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Main exposure is to the North American food and beverage industry and produces and sells almost entirely domestic. | 7x |
| Crown Holdings Inc. | BB+ | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Transit Packaging segment affected by tariffs, but expect weaker segment performance will be mitigated by its Beverage business. Aluminum beverage can companies have historically demonstrated an ability to pass-through higher aluminum costs due to tariffs and we believe direct effects will be minimal. | 5x |
| Five Star Intermediate Holding LLC | B- | Stable | Low | Cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Large exposure to somewhat defensive pet food and animal nutrition. Positive free cash flow, liquidity, and debt maturity profile alleviate potential tariff effects. | 1.5x EBITDA interest coverage or cash flow constraints |
| Graham Packaging Co. Inc. | B | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Primarily operates in North American food and beverage end markets. | 7x leverage or cash flow constraints |
| Graphic Packaging International LLC | BB+ | Stable | Low | Cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. This includes an estimated 2% decline in volumes this year as the company's exposure to consumer products and quick service restaurant customers will feel the pressure of tariffs. | 4x |
| International Paper Co. | BBB | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow, particularly once DS Smith is fully integrated. Moderate exposure to e-commerce, shipping and distribution, and durable goods could lessen this cushion if weaker macroeconomic conditions persist. | 3.5x |
| M2S Group Holdings Inc. | B | Stable | Low | Cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flows, slightly offset by exposure to e-commerce. | 6.5x |
| Packaging Corp. of America | BBB | Positive | Low | Cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. The company exports a small amount of corrugated products to China that would be subject to tariffs but we expect this to be easily managed. | 2x |
| Plastipak Holdings Inc. | B+ | Stable | Low | Cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Exposed to North American food and beverage end markets. | 5x |
| ProAmpac PG Intermediate LLC | B- | Stable | Low | Cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flows. Large exposure to food and beverage. | 1.5x EBITDA interest coverage or liquidity constraints or an unsustainable capital structure |
| Ring Container Technologies Group LLC | B | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Exposure to both retail food and food service, which has shown to be resilient through recent market downturns. | 6.5x |
| Sabert Corp. | B+ | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Large exposure to defensive food end markets. Significant debt maturity wall in December 2026. | 5x or refinancing risk |
| Sealed Air Corp. | BB+ | Stable | Low | Cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Large exposure to defensive food end markets. | 5x |
| Smurfit Westrock plc | BBB | Stable | Low | Cushion in credit ratios should provide ratings stability from direct or indirect tariff effects on earnings and cash flow. The company has minimal direct tariff exposure between US, Mexico, and Canada, but company should be in position to mitigate those impacts. | 4x |
| Sonoco Products Co. | BBB- | Stable | Low | Cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Consumer food packaging now accounts for about two-thirds of products following recent portfolio changes. We expect Sonoco to be able to adjust selling prices due to direct/indirect cost increases on metal cans. | 4x |
| SupplyOne Holdings Co. Inc. | B | Stable | Low | Solid liquidity position and cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Distributor servicing wide range of end markets, provides for some diversification. | 6.5x or liquidity/cash flow constraints |
| Technimark Holdings LLC | B- | Stable | Low | Substantial cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Main exposure is within specialty molded packaging for healthcare end markets, which should provide some stability, and produces and sells almost entirely domestic. | Liquidity constraints or unsustainable capital structure |
| Toucan TopCo Ltd. | B- | Stable | Low | Solid liquidity position and cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. | 1.5x EBITDA interest coverage or liquidity constraints or an unsustainable capital structure |
| TricorBraun Holdings Inc. | B- | Stable | Low | Solid liquidity position and cushion in credit ratios to withstand direct or indirect tariff effects on earnings and cash flow. Distributor servicing wide range of end markets, provides for some diversification. | 1.5x EBITDA interest coverage or liquidity constraints or an unsustainable capital structure |
Related Research
Research Updates
- Pactiv Evergreen Inc.’s Ratings Equalized With Parent At ‘B+’ After Novolex Acquisition; Ratings Subsequently Withdrawn, April 10, 2025
- LABL Inc. Outlook Revised To Negative From Stable On Weaker Volume And Cash Flow Expectations; 'B-' Rating Affirmed, April 2, 2025
- Clydesdale Acquisition Holdings Inc. Upgraded To 'B+' On Pactiv Evergreen Acquisition Closing; Off Credit Watch; Outlook Stable, March 17, 2025
- Poseidon Investment Intermediate L.P. Downgraded To 'SD' From 'CCC' On Debt Repurchase, March 3, 2025
- AptarGroup Inc. Outlook Revised To Positive From Stable On Continued Strong Performance In Pharma Resulting In Lower Leverage; 'BBB-' Issuer Credit Rating Affirmed, Feb. 20, 2025
- O-I Glass Inc. Outlook Revised To Stable On Marked Underperformance Due To Weak Alcoholic Beverage Volumes; 'BB-' Issuer Rating Affirmed, Feb. 7, 2025
Full Analyses
- Silgan Holdings Inc., April 22, 2025
- Zinc-Polymer Parent Holdings LLC, April 4, 2025
- Ring Container Technologies Group LLC, Feb. 24, 2025
Tear Sheets
- SupplyOne Holdings Co. Inc., March 27, 2025
- Mauser Packaging Solutions Holding Co., March 25, 2025
- Berlin Packaging LLC, March 11, 2025
- Pregis TopCo LLC, Jan. 21, 2025
| Primary Contact: | Michael Tsai, San Francisco 1-212-438-1084; michael.tsai@spglobal.com |
| Secondary Contacts: | Morgan Wilson, CFA, Englewood 303-721-4927; morgan.wilson@spglobal.com |
| Matthew O'Connor, Boston 1-617-530-8318; matthew.oconnor@spglobal.com | |
| Andrew Manuel, CFA, Boston 617-530-8024; Andrew.Manuel@spglobal.com | |
| Donald Marleau, CFA, Toronto 1-416-507-2526; donald.marleau@spglobal.com |
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