Moody’s rates Cascades notes Ba3

Moody's Investors Service said it assigned a Ba3 rating to Cascades Inc.'s proposed $250 million senior notes due 2023 and affirmed existing ratings.

The outlook remains stable.

Cascades intends to use the proceeds to fund the recently announced tender offer for its 2020 notes.

The new notes will be unsecured and will rank equally with all of the company's existing senior unsecured debt. They will rank behind the company's senior secured bank facility (rated Baa3) and will be rated one notch below the Ba2 corporate family rating, in accordance with Moody's loss-given-default methodology.

Moody’s said the company’s Ba2 corporate family rating its significant position as one of the leading producers of recycled paper packaging and tissue products. The rating incorporates the relative demand stability of the containerboard and tissue end markets and expectations of adjusted leverage improving toward 4 times over the next 12 to 18 months.

This is partially offset by the company's relatively weak operating margins, volatile fiber costs and the company's tendency to conduct small debt-financed acquisitions, the agency said.

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