Fitch rates Deutsche Post convertibles, notes BBB+

Fitch Ratings said it assigned a BBB+ rating to Deutsche Post AG's €1 billion seven-year convertible bond, €300 million eight-year notes and €700 million 12-year notes.

The ratings are in line with the company's senior unsecured BBB+ rating.

The convertible bond has a covenant structure that mirrors the senior unsecured debt obligations, Fitch said.

The company has a long-term issuer default rating of BBB+ and short-term issuer default rating of F2.

The outlook is stable.

The proceeds will be used to further fund the company's German pension obligations, the agency said.

Given its approach to unfunded pension schemes, Fitch said it views this transaction as marginally credit negative as funds from operations lease adjusted net leverage is set to increase by around 0.4x on average for 2012 to 2014 from about 3.0x before the transaction.

However, the rating impact is neutral because leverage is expected to remain within the guideline for the BBB+ rating at 3.5x, the agency said.

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