S&P Global Ratings has upgraded its view on Calumet Inc.'s credit trajectory, revising the company's outlook to positive from stable while leaving the long-term issuer credit rating unchanged at 'CCC+'. The action follows Calumet's refinancing of its near-term obligations and a shift in the company's debt maturity profile.
In January, Calumet issued new unsecured notes and applied the proceeds, together with internal liquidity, to refinance tranches of its unsecured notes that had been scheduled for 2026 and 2027 maturities. The company also extended the maturity date on its asset-based lending (ABL) facility, moving its next material debt maturity out to July 2028.
S&P said it expects Calumet's credit measures to show continued improvement over the coming 12 months. The rating agency cited several supporting factors - favorable market fundamentals, an improved product mix and efforts to optimize internal costs - that should help lift profitability and cash generation.
On profitability, S&P projects Calumet's EBITDA margins will rise by roughly 200 basis points to about 8% in 2025, and to approach roughly 10% in both 2026 and 2027. Regarding leverage, the agency forecasts the company's weighted-average adjusted debt to EBITDA will sit in the 7x-8x range, with a move toward about 7x in the second half of 2026.
The company's Montana Renewables LLC unit is slated to materially expand its sustainable aviation fuel, or SAF, production. Management guidance incorporated in S&P's view indicates MRL's annual sustainable output will rise to between 120 million and 150 million gallons in the second quarter of 2026, up from the current capacity of 30 million gallons per year. Management has stated that contracts are in place for a majority of that expanded SAF capacity.
S&P also expects Calumet to generate significantly positive free operating cash flow in 2025. The agency points to lower interest expense once MRL's prior third-party debt - a Department of Energy loan - is retired in February 2025, as well as the anticipated uplift from higher EBITDA margins.
Recent policy and regulatory developments have provided additional tailwinds for the renewable fuels sector, according to S&P. The proposed 2026-2027 Renewable Fuel Standard rule includes record-high renewable volume obligations, and production tax credits have been extended through 2029, factors the agency views as supportive for the industry.
At the same time, S&P emphasized that Calumet remains exposed to commodity-price volatility and shifts in government policy around renewable fuels. The agency noted potential renewable identifiable number, or RIN, obligations as a specific source of downside risk that could weaken credit metrics and liquidity if Calumet is required to settle RIN compliance requirements.
On reported obligations, the company disclosed a decline to about $133 million as of September 30, 2025, down from roughly $457 million as of June 30, 2025.
S&P indicated an upgrade to 'B-' could be warranted if Calumet achieves a consistent adjusted debt to EBITDA ratio below 8x, maintains EBITDA interest coverage at or above 1.5x, and sustains positive free operating cash flow.
Contextual note - The assessment reflects the rating agency's view that the refinancing and operational actions should bolster Calumet's near-term credit profile, while the company remains sensitive to commodity and policy risk.