S&P upgrades Packaging Corp. rating to BBB+ on low leverage

S&P Global Ratings has upgraded Packaging Corp. of America (PCA) to a 'BBB+' rating from 'BBB', citing the company's sustained leverage below 2.0x despite its recent acquisition of Greif’s containerboard business. The company financed the $1.8 billion acquisition using $1 billion in term loan proceeds, $300 million in cash, and $500 million in unsecured notes, maintaining leverage of about 1.2x in the four fiscal years prior to the Greif acquisition.

PCA is expected to realize roughly $60 million of synergies annually from the Greif acquisition, which are projected to be fully realized by the end of 2027. The company's market-leading margins exceed 21%, and S&P forecasts adjusted leverage at 1.7x at year end, falling to 1.4x in 2027. Revenue is expected to increase mid- to high-single-digit percent in 2027, with S&P Global Ratings-adjusted EBITDA margins sustaining above 23%.

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