S&P rates DDR notes BBB-

Standard & Poor's said it assigned a BBB- rating to DDR Corp.'s proposed $300 million 10-year senior unsecured notes.

The agency also said it assigned a 2 recovery rating to the notes, indicating 70% to 90% expected default recovery.

The notes will be used to fund the $1.46 billion acquisition of Blackstone's 95% interest in 30 of the 44 assets held in the Blackstone/DDR joint venture, S&P said.

The proposed funding is roughly leverage-neutral at nearly 45% debt to 55% equity with $675 million of new common equity, $146 million of DDR preferred equity and prior mezzanine loan repayments, $398 million of assumed mortgaged debt and $300 million of new 10-year senior unsecured notes, the agency said.

Credit metrics are expected to be flat to modestly stronger on a pro forma basis upon closing, S&P said.

Near-term credit metrics will be modestly weaker due to the timing of new senior unsecured debt funding prior to the Oct. 1 scheduled closing of the acquisition, the agency said.

The transaction will improve the company's exposure to major markets and allows DDR to acquire assets it is very familiar with in an off-market deal, S&P said.

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