S&P Upgrades Packaging Corp. of America to 'BBB+' on Low Leverage

S&P Global Ratings has upgraded Packaging Corp. of America's (NYSE: PKG) credit rating to 'BBB+' from 'BBB', assigning a stable outlook. The ratings agency cited the company's consistent ability to maintain low leverage, even after a significant debt-funded acquisition.

Key Rating Drivers

The upgrade reflects PCA’s success in keeping its S&P Global Ratings-adjusted leverage below 2.0x. This financial discipline was maintained despite the company's recent acquisition of Greif's containerboard business.

S&P forecasts that PCA’s adjusted leverage will be approximately 1.7x by the end of 2026, with a further decrease to 1.4x expected in 2027. For comparison, the company maintained leverage of around 1.2x in the four fiscal years preceding the acquisition.

Impact of Greif Acquisition

In September 2025, PCA completed the $1.8 billion acquisition of Greif's containerboard assets. The deal was financed through a combination of debt and cash:

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• $1 billion in term loan proceeds
• $500 million in unsecured notes
• $300 million in cash

The acquisition included two containerboard mills and eight corrugated plants, adding 800,000 tons of capacity. S&P expects PCA to realize approximately $60 million in annual synergies from the integration, which are anticipated to be fully achieved by the end of 2027.

Market Position and Outlook

As the third-largest producer of containerboard and corrugated products in North America, PCA maintains market-leading margins above 21%. The company has implemented three price increases in 2026, including a recent $140 per ton hike effective September 1.

S&P projects that PCA's revenue will grow by a mid- to high-single-digit percentage in 2027, with adjusted EBITDA margins sustaining above 23%. The company also expects three new gas turbines to come online at its mills, which will help offset reliance on the grid and mitigate potential outages.