Moody's: Evonik notes Baa3

Moody's Investors Service said it assigned a provisional Baa3 rating to the proposed issuance of subordinated resettable fixed-rate notes by Evonik Industries AG.

The outlook is stable.

The size and completion of the hybrid transaction are subject to market conditions, Moody's said.

In December 2016, Evonik announced that it had agreed to acquire the silica business of J.M. Huber Corp. for about $630 million, the agency said.

The transaction is expected to close in the second half of 2017, Moody's noted.

Evonik intends to use the proceeds of €500 million raised from the proposed issuance of hybrid securities to fund the Huber transaction while maintaining a capital structure commensurate with its current rating, the agency explained.

The rating on the notes is two notches lower than Evonik's Baa1 senior unsecured rating, reflecting the features of the proposed hybrid securities in relation to the existing senior unsecured obligations of Evonik, which are rated Baa1, Moody's said.

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