Moody's rates International Paper notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to International Paper Co.'s $1 billion 7.4% senior notes due 2014, $1.7 billion 7.95% senior notes due 2018 and $0.3 billion 8.7% senior notes due 2038.

The outlook is negative.

Proceeds will be used to finance the company's previously announced acquisition of Weyerhaeuser Co.'s containerboard, packaging and recycling operations.

Ratings reflect the company's significant scale and leading market positions with growing geographic diversification, stable profit margins and vertically integrated relatively low cost asset base, the agency said.

Challenges include declining North American demand for paper and packaging, rising fiber and energy costs, and the cyclical and capital intensive nature of the industry, Moody's noted.

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