S&P rates ENCE Energia notes BB-

Standard & Poor’s said it assigned a BB- rating to the proposed €250 million senior unsecured notes due 2022 to be issued by ENCE Energia y Celulosa, SA.

The agency also said it assigned a recovery rating of 4 to the proposed notes, reflecting 30% to 50% expected default recovery.

The notes are expected to be guaranteed by ENCE SA’s subsidiaries while Celulosa Energeia, SAU and ENCE Energeia, SAU will be stripped out of the restricted group, S&P said.

The recovery rating on the proposed notes assumes that ENCE will use the proceeds of the issuance to fully repay the existing €225 million senior secured notes due 2020, the agency said.

The rating on the notes is constrained by the structural subordination of the notes to a significant amount of prior-ranking liabilities, their unsecured nature and weak documentation, S&P added.

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