S&P gives BBB- to Coach notes

S&P said it assigned a BBB- issue-level rating to Coach Inc.'s proposed $1 billion aggregate senior unsecured notes due 2022 and 2027.

The company plans to use the proceeds to fund its recently announced acquisition of Kate Spade & Co. (BB-/Watch Pos/--) and for related fees and expenses.

The pending acquisition has no impact on the existing ratings on Coach.

S&P said it expects Coach's operating performance to remain stable, with continued growth for Stuart Weitzman and the newly acquired Kate Spade and stable performance for the Coach brand, offsetting planned strategic exits from certain wholesale doors.

Pro forma for the new debt and acquisition, the agency forecasts FFO to debt will decrease to mid-30% and improve to high-30% by the end of fiscal 2018 on the repayment of the $800 million term loan and continued EBITDA growth.

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